Exhibit 99.1
Investor Meetings
February 28, 2014
Cross Winds Energy Park
Jackson Gas Plant
Consumers Smart Energy Program
Morgan Stanley Utilities Conference
March 3, 2014
Cross Winds Energy Park
Jackson Gas Plant
Consumers Smart Energy Program
Consumers Smart Energy Program
UBS 2014 Natural Gas & Electric Utilities Conference
March 5, 2014
Cross Winds Energy Park
Jackson Gas 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, 2013. 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.
1
Mindset . .. . .
10-Year Actual $1.66
7% CAGR $1.78 5%—7% Peers 4% $1.74 $1.45 $1.55 $1.36 $1.26 6% $1.21 a $1.08
6% 5%—7% $1.08 $1.02 $0.96 14% 96 $0.90 27% 84 $0.84 32% 66 $0.81 Int’l Sale 39% 50¢ 80%
36¢ 20¢
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Future Dividend Payout 0% 25% 30% 40% 49% 58% 62% 62% 60%-70%
Adjusted EPS (non-GAAP) excluding MTM in 2004-2006 a $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock
. . . . drives consistent “real” growth.
2
CMS Energy MODEL . . . .
RESULTS
Consistent Predictable
Self-Imposed Limits
Sustainable base rates < 2% inflation
Investment “Needed Not Wanted”
Investment
Ten year—$15 billion
Small, bite size projects
None “Bet The Company”
Upside Catalysts
A. Capex >$15 billion
B. PPA’s expire = 2,000 MW
C. Credit rating
D. Sales
E. Capacity price increases
F. ROA elimination
G. Continuous cost reductions
. . . . benefits customers AND shareowners.
3
Model Delivers . . . .
One Year Three Year Five Year Ten Year Future Annual Growth
CMS Energy 7% 22% 37% 105% 5%-7%
Note: Dividend Growth 6 29 116 na 5-7
Peer Group 3 9 15 45 ?
Source: Bloomberg, periods ending 12/31/2013. Consensus used for companies that haven’t reported.
. . . . EPS cumulative growth at the very high end of all peers.
| 4 |
|
Consumers Energy . . . .
Territory
Overview
Fourth largest combination utility in the United States 1.8 million electric and 1.7 million gas customers 8,600 MW of owned and purchased generation capacity 312 TBtu of gas storage capacity Premium regulatory environment
. . . . one of largest investors and employers in Michigan.
5
Purchase of Jackson Gas Plant . . . .
The Transaction
Asset:
540 MW gas plant located in
Jackson, Michigan
Price: $155 million ($286/kW)
Technology: Combined cycle
Heat rate – 8,800 Btu/kWh
Connecting The “Dots”
Retire small coal plants
Recover through securitization; lower rates
Replace with cleaner, inexpensive gas plant purchase
Suspend CON; Thetford on hold
Close late 2015 when needed
Creates headroom for other needed investments
. . . . provides substantial savings to customers.
6
New Gas Plant . . . .
Customers benefit:
Lower rates
Better timing
Investors benefit:
Lower risk
Investment backfill
EPS & OCF growth more certain
No block equity
Other Needed Investments—$545 Million
Electric Reliability $200 Million
Gas Infrastructure $165 Million
Accelerate Smart Energy & Other $180 Million
. . . . adds capacity and makes room for more investment.
7
Regulatory Update . . . .
Amount
(mils)
Savings from purchase of Jackson Plant; replacing build
Securitize Classic 7
MPSC Order complete
No appeals
Avoid rate cases until 2015 test year
New investment self-funded
$545
$390
$150
. . . . new investment self-funded, improving rates.
8
9
Rate Cases Eliminated! . . . .
Gas Rate Case Avoided
Electric Rate Case Avoided
$49
O&M
Tax/Other
$0
2013 2014
$100
O&M
Tax
Cross Winds
$0
2014
. . . . good for customers (prices) and investors (no ROE risk).
A. Visible, 10-Year INVESTMENT Plan . . . .
2013-2022
10-Year Plan
Opportunity Level
Opportunity
$15 Billion
$20 Billion
Amount
(bils)
Generation capacity
PPA replacement $1.7
ROA return
Higher renewables .3 Gas conversions & expansion 1.0 Electric reliability & transmission 2.0 Total Opportunities $5.0
Rate Base 6% Customer base rates <2
>4
. . . reflects catch-up needed to reduce cost and improve reliability.
10
Capital Investment . . . .
Amount (bils) $1.8
$7.4 Now $8
+$1 Bil
A.) Was $7 B.) $6.3 w/Thetford w/o Thetford
Estimated 2019 Depreciation $800 Million 2014 Depreciation $600 Million
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
. . . . up $0.4 billion; $545 million savings from Jackson IPP more than offset by addition of $1 billion!
11
12
Investment Catch-Up . . . .
Amount (bils) $1.8
$1.5
Peers
Restructuring
Catch Up
CMS
2013 Pct of Market Cap Cap Inv OCF Liquidity CMS 21% 20% 24% Peers 18 16 20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: 10K; actual amounts through 2012 smoothed for illustration
. . . . creates unique opportunity; with OCF already stronger than peers.
13
B. Expiring PPA’S . . . .
MW
10,000 9,000 8,000 7,000 6,000 0
Planned Demand Reductions
Capacity Shortfall
Jackson Plant
Classic 7 Mothballed (950 MW)
Palisades PPA Termination (778 MW)
MCV PPA Termination (1,240 MW)
Current Supply Portfolio
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
CE Portfolio Capacity Shortfall
Net Peak Demand Plus Reserves
Jackson Plant
Smart Energy, EO, Interruptibles Total Peak Demand Plus Reserves
Replace PPA contracts with owned generation
Provides incremental rate base (and earnings potential) with no impact to customer rates
. . . . will provide investment headroom.
C. Credit RATINGS . . . .
Scale S&P /
Fitch Moody’s S&P Moody’s Fitch
A+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1
BBB Baa2 BBB- Baa3 BB+ Ba1 BB Ba2 BB- Ba3 B+ B1 B B2 B- B3
Consumers Secured
CMS Unsecured
Present Prior 2002
Outlook Stable Stable Stable
Reflects
Consistent Performance
Less Risk
Customer Focus
Constructive Regulation
Good Energy Policy
. . . . just upgraded.
14
D. SALES Growth . . . .
Economic Indicators
Grand
Rapids Michigan U.S
Unemployment 5.6% 8.4% 6.7%
December 2013
GDP (real) 2010 thru 2012 14 11 7
Population 2010 Census 2 0 2
thru July 2012
. . . . best in Midwest.
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E. CAPACITY Price Market Increases . . . .
Today
(mils)
Future Scenarios
(mils)
+$50
$55
$35
+$30
$5
Capacity price ($ kW per month)
< $0.50
$4.50
$7.50
. . . . could add value to the 700 MW “DIG” plant.
16
F. Retail Open Access Policy (ROA) . . . .
0.02% 310 “ROA” Electric Customers
1.8 Million Consumers Energy Customers = 99.98%
Governor wants affordable residential bills and competitive industrial rates Eliminating ROA could:
Lower industrial rates by 10% or all customers by 4%
Policy has big impact on competitiveness
$150 million cost opportunity
. . . . change could allow for lower industrial rates.
17
Michigan’s Energy Future . . . .
Governor’s 2025 Energy Goals
Regulatory Support
Adaptability
Eliminate energy waste
Reduce coal, replace with renewables and gas
Reliability
Top quartile performance (SAIFI)
Top half performance (SAIDI)
Affordability
Residential bills below U.S. average
Competitive industrial rates
Environmental Protection
Reduce mercury, acid rain, particulates
Increase renewables
(from the right)
Michigan Governor Rick Snyder MPSC Chairman John Quackenbush
Michigan Energy Office Director Steve Bakkal
. . . . will continue to strengthen with sound policy and strong leadership.
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The Governor on Retail Open Access. . . .
Question: “You seem to agree with utilities’ argument on choice. Does that mean you will eliminate shopping altogether or keep the 10% cap in place?”
“Choice creates a lot of challenges and problems so I wouldn’t jump to say increasing choice is the answer. I’m concerned about people bouncing back and forth depending on what’s going on with rates, essentially trying to arbitrage markets.”
Governor Rick Snyder
The Jackson City Council voted unanimously to pass a resolution opposing House Bill 5184.
. . . . choice is not the solution to industrial competitiveness.
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G. Self-Initiated COST Control . . . .
Average Annual O&M Change
+6%
+2%
+1%
Peers
Major
CMS Flat Storms
-2% -3% -2%
Peers 2013 -6%
Reinvestment w/o Storm Changes Major 2013 Actual/Plan -8% Storms
-10%
2006-2012 2012 2013 2014 2014-2018
. . . . . holds down rates and allows better system reliability.
20
G. Continuous COST Reduction . . . .
Past Progress
Future Examples
Headcount
7,600
$100k
Each 7,200
600 1,000 $60k
Each
2010 2012
People Productivity = $64 million
Fuel Mix MW Employees 2016 Retire Coal -900 -300 2016 Add GCC + 540 + 20 Total -360 -280 Future Savings (mils) $25
Benefits Future Savings Annual (mils)
2002-2012 Actions completed $25 2013 EGWP, OPEB & other 50 Future savings $75
. . . . . a way of life at CMS.
21
CMS Mindset . . . .
Icy Late December
Than O&M Forecast B/(W)
(mils)
Storm(total Insurance $50 M) $(37) 16 Sales Lower—weather contributions 12 9 Total $ 0
Guidance
2014 Cold Winter
2013 Cold Winter & Cost Savings
2012 Hot Summer
Reinvested earlier
2013 Mild Summer
$1.66 +7%
Reinvestment (January-October) Amount (mils) Improve gas reliability $16 Improve electric reliability 14 Accelerate generation maintenance 7 Prefund pension & storm response 21 Total $58
. . . . delivere for customers AND investors.
22
23
Operating Cash Flow Growth . . . .
Amount
(bils)
Gross operating cash flowa up $0.1 billion per year
$ 2.5 2.0 1.5 1.0 0.5 0
(0.5)
Up $0.5 Billion
$2.2 $2.0 $2.1 $1.9 $1.7 $1.8 $1.6 $1.5
Interest $1.4 $1.45 Working capital and taxes Investment
a Non-GAAP Cash flow before dividend
2012 2013 2014 2015 2016 2017 2018
NOLs & Credits $0.7 $0.6 $0.4 $0.5 $0.4 $0.2 $0.1
. . . . self-funds investment and strategy.
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Key Takeaways . . . .
Growth
5%-7% EPS growth
Dividend growth premium (like earnings)
Transparent
Ten-year, $15 billion investment plan
Constructive regulatory climate
Continuous cost reductions
Predictable
On track for 12th consecutive year of consistent, sector-leading financial performance
Catalysts not in plan!
. . . . attractive future total shareowner return.
Appendix
26
2014 Adjusted EPS (non-GAAP) . . . .
Utility
Enterprises and Parent
7¢- 11¢
$1.74 -$1.78
6? 1? $1.66 14?
Weather (15)¢
27¢ 2013
Sales (3)¢ Full Productivity Year
(18)¢ Impact
Investment Higher
Storms
(18)¢—(22)¢
2013 Weather & Sales Investment Cost Lower O&M (inc Tax Savings Rate Lower Parent 2014
& Other benefits) Changes Debt Prefunding
. . .. . growth up 5% to 7% over 2013.
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Capital Expenditures
2014-2018 Plan
2013 2014 2015 2016 2017 2018 Total
(mils) (mils) (mils) (mils) (mils) (mils) (mils)
Electric
Distribution $ 199 $ 190 $ 197 $ 202 $ 211 $ 208 $ 1,008
Generation 89 96 93 88 60 155 492
New Customers 48 47 38 39 38 34 196
Other 96 102 81 82 84 61 410
Electric Base Capital $ 432 $ 435 $ 409 $ 411 $ 393 $ 458 $ 2,106
Gas
Distribution $ 177 $ 152 $ 181 $ 177 $ 193 $ 212 $ 915
New Customers 45 45 40 36 36 35 192
Other 88 60 53 53 49 44 259
Gas Base Capital $ 310 $ 257 $ 274 $ 266 $ 278 $ 291 $ 1,366
Total Base Capital $ 742 $ 692 $ 683 $ 677 $ 671 $ 749 $ 3,472
Investment Choices
Environmental $ 292 $ 280 $ 200 $ 122 $ 114 $ 111 $ 827
Electric Reliability 102 156 208 108 129 133 734
Gas Infrastructure 117 182 198 178 202 211 971
New Gas Plant Capacity — — — 155 10 100 265
Renewables 83 163 9 — — — 172
Consumers Smart Energy 66 84 134 175 120 — 513
Ludington Hydro & other 62 90 55 58 56 145 404
Total Choices $ 722 $ 955 $ 804 $ 796 $ 631 $ 700 $ 3,886
Total Utility $ 1,464 $ 1,647 $ 1,487 $ 1,473 $ 1,302 $ 1,449 $ 7,358
2014 Cash Flow Forecast (non-GAAP)
CMS Energy Parent
Consumers Energy
Amount
(mils)
Cash at year end 2013 $ 18
Sources
Operating (depreciation & amortization $679) $ 1,800
Other working capital (125)
Sources $ 1,675
Uses
Interest and preferred dividend $ (225)
Capital expenditures b (1,645)
Dividend and tax sharing $(225) to CMS (670)
Pension contribution 0
Uses $ (2,540)
Cash flow $ (865)
Financing
Equity $ 350
New issues (includes securitization bonds) 850
Retirements (200)
Net short-term financing & other (128)
Financing $ 872
Cash at year end 2014 $ 25
Bank Facility ($650) available $ 650
AR Facility ($250) available $ 180
Amount
(mils)
Cash at year end 2013 $ 116
Sources
Consumers Energy dividend and tax sharing $ 670
Enterprises 25
Sources $ 695
Uses
Interest and preferred dividend $ (135)
Overhead and Federal tax payments (10)
Equity infusion (350)
Pension contribution 0
Uses a $ (495)
Cash flow $ 200
Financing and Dividend
New issues $ 250
Retirements (250)
DRP, continuous equity 45
Net short-term financing & other (10)
Common dividend (290)
Financing $ (255)
Cash at year end 2014 $ 61
Bank Facility ($550) available $ 548
a Includes other
b Includes cost of removal and capital leases
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29
2014 Sensitivities . . . .
Annual Impact
Status Sensitivity EPS OCF
(mils)
Sales a
Electric (37,017 Gwh) + 1% + $0.05 + $20
Gas (291.0 Bcf) + 5 + 0.07 + 30
Gas prices (NYMEX) + $1.00 –+ 0.01 –+ 60
ROE (authorized)
Electric (10.3%) + 25 bps + 0.03 + 12
Gas (10.3%) + 25 + 0.01 + 5
a Reflect 2014 sales forecast; weather adjusted
. . . . reflect strong risk mitigation.
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Liquidity (as of 12/31/13) . . . .
Availability
2013 Financing Activities
CMS Energy
5-year revolver—2018
Consumers Energy
5-year revolver—2018
5-year revolver—2018 AR Facility—2015 Cash
$1.5 Billion
$548 mils
500
150 80 172
Consumers Energy FMB
$425 million, 3.95%, 2043
$325 million, 3.375%, 2023 CMS Energy
$250 million, 4.7%, 2043
$20 million equity
Filed to issue $50 million periodically
. . . . strong and conservative.
GAAP Reconciliation
Earnings Per Share By Year GAAP Reconciliation
(Unaudited)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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
After-tax items:
Electric and gas utility 0.21 (0.39)- - (0.07) 0.05 0.33 0.03 — 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-GAA $0.81 $0.87 $1.39 $0.57 $0.84 $1.21 (a) $1.26 $1.36 $1.45 $1.55 $ 1.66
Mark-to-market impacts 0.03 (0.43) 0.51
Adjusted earnings per share, excluding MTM—non-GAA NA $0.90 $0.96 $1.08 NA 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.
32
CMS Energy
Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
(unaudited)
(mils)
2012 2013 2014 2015 2016 2017 2018
Consumers Operating Income + Depreciation & Amortization $ 1,635 (a) $ 1,740 $ 1,800 $ 1,876 $ 1,952 $ 2,054 $ 2,162
Enterprises Project Cash Flows 17 16 25 30 28 35 36
Gross Operating Cash Flow $ 1,652 $ 1,756 $ 1,825 $ 1,906 $ 1,980 $ 2,089 $ 2,198
Other operating activities including taxes, interest payments and
working capital (411) (335) (375) (356) (730) (739) (748)
Net cash provided by operating activities $ 1,241 $ 1,421 $ 1,450 $ 1,550 $ 1,250 $ 1,350 $ 1,450
(a) excludes $(59) million 2012 disallowance related to electric decoupling
33
34
Reclassifications From Sources and Uses to Statement of Cash Flows
Presentation Sources and Uses Description Tax non-GAAP Amount Interest Sharing Operating Other Working Payments as Operating Capital Capital as Investing Securitization Lease Pymts as Financing Common Debt Pymts as Financing Consolidated Statements of Cash Flows Dividends as Financing
GAAP Amount Description
Cash at year end 2013 $ 18 $ — $ — $ — $ — $ — $ — $ 18 Cash at year end 2013
Sources
Operating (dep & amort $679) $ 1,800
Other working capital (125) Net cash provided by
Sources $ 1,675 $ (242) $ (225) $ 39 $ 23 $ 58 $ — $ 1,328 operating activities
Uses
Interest and preferred dividends $ (225)
Capital expenditures a (1,645)
Dividends/tax sharing to CMS (670) Net cash used in
Uses $ (2,540) $ 225 $ 225 $ (39) $ — $ — $ 445 $ (1,684) investing activities
Cash flow from
Cash flow $ (865) $ (17) $ — $ — $ 23 $ 58 $ 445 $ (356) operating and
investing activities
Financing
Equity $ 350
New Issues 850
Retirements (200)
Net short-term financing & other (128) 17 Net cash provided by
Financing $ 872 $ 17 $ — $ — $ (23) $ (58) $ (445) $ 363 financing activities
Net change in cash $ 7 $ — $ — $ — $ — $ — $ — $ 7 Net change in cash
Cash at year end 2014 $ 25 $ — $ — $ — $ — $ — $ — $ 25 Cash at year end 2014
a Includes cost of removal and capital leases
CMS Energy Parent
2014 Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited)
Reclassifications From Sources and Uses to Statement of Cash Flows
Presentation Sources and Uses Non Equity Consolidated Statements of Cash Flows
non-GAAP Uses GAAP
Description Amount as Operating Other Amount Description
Cash at year end 2013 $ 116 $ — $ (116) $ — Cash at year end 2013
Sources
Consumers Energy dividends/tax sharing $ 670
Enterprises 25 Net cash provided by
Sources $ 695 $ (168) $ — $ 527 operating activities
Uses
Interest and preferred dividends $ (135)
Overhead and Federal tax payments (10)
Equity infusions (350)
Pension Contribution — Net cash used in
Uses (a) $ (495) $ 145 $ — $ (350) investing activities
Cash flow from
Cash flow $ 200 $ (23) $ — $ 177 operating and
investing activities
Financing and dividends
New Issues $ 250
Retirements (250)
Equity programs (DRP, continuous equity) 45
Net short-term financing & other (10) 23
Common dividend (290) Net cash provided by
Financing $ (255) $ 23 $ 55 $ (177) financing activities
Net change in cash $ (55) $ — $ 55 $ — Net change in cash
Cash at year end 2014 $ 61 $ — $ (61) $ — Cash at year end 2014
(a) Includes other
35
Consolidated CMS Energy
2014 Forecasted Consolidation of Consumers Energy and CMS Energy Parent Statements of Cash Flow (in millions) (unaudited)
Eliminations/Reclassifications/Consolidation to
Arrive at the Consolidated Statement of Cash Flows
Statements of Cash Flows Other Consumers Equity
Consumers CMS Parent Consolidated Common Dividend Infusions to Consolidated Statements of Cash Flows
Description Amount Amount Entities as Financing Consumers Amount Description
Cash at year end 2013 $ 18 $ — $ 154 $ — $ — $ 172 Cash at year end 2013
Net cash provided by $ 1,328 $ 527 $ 40 $ (445) $ — $ 1,450 Net cash provided by
operating activities operating activities
Net cash provided by (1,684) (350) (114) — 350 (1,798) Net cash used in
investing activities investing activities
Cash flow from $ (356) $ 177 $ (74) $ (445) $ 350 $ (348) Cash flow from
operating and operating and
investing activities investing activities
Net cash provided by $ 363 $ (177) $ 18 $ 445 $ (350) $ 299 Net cash provided by
financing activities financing activities
Net change in cash $ 7 $ — $ (56) $ — $ — $ (49) Net change in cash
Cash at year end 2014 $ 25 $ — $ 98 $ — $ — $ 123 Cash at year end 2014
36