10-QPeriod: Q2 FY2019

CMS ENERGY CORP Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 25, 2019For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corporation (CMS) reported a decrease in net income available to common stockholders for the six months ended June 30, 2019, compared to the same period in 2018. Net income declined from $380 million to $306 million, with diluted Earnings Per Share (EPS) falling from $1.35 to $1.08. This decrease was primarily driven by higher service restoration costs due to winter storms, lower electric sales due to unfavorable weather, increased depreciation, and reduced earnings in the enterprises segment, which were partially offset by benefits from electric and gas rate increases and higher gas sales from colder weather. The company's strategy continues to focus on a 'Triple Bottom Line' of people, planet, and profit, emphasizing investments in infrastructure, environmental stewardship, and customer value. Significant capital expenditures are planned over the next five years, primarily for gas and electric infrastructure upgrades. The company also received approval for its Integrated Resource Plan (IRP), which outlines a strategy for cleaner energy, including the planned retirement of coal-fueled generation. Liquidity remains solid, with substantial availability under revolving credit facilities. The company expects sufficient funding sources to meet contractual obligations. Despite the year-over-year decline in earnings, the company's ongoing investment plan and focus on operational efficiency aim to support future growth and shareholder value.

Financial Highlights

45 data points
Beta

Revenue

$1.45B

Net Income

$94.00M

6.5% Net Margin

EPS (Diluted)

$0.33

Total Assets

$25.29B

Cash & Equivalents

$312.00M

Free Cash Flow

$76.00M

Financial Statements
Beta
Revenue$1.45B
Operating Expenses$1.23B
Operating Income$218.00M
Interest Expense$131.00M
Net Income$94.00M
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Diluted)284.00M

Key Highlights

  • 1Net income available to common stockholders decreased by $74 million to $306 million for the six months ended June 30, 2019, compared to $380 million in the prior year.
  • 2Diluted Earnings Per Share (EPS) decreased to $1.08 for the first six months of 2019, down from $1.35 in the same period of 2018.
  • 3Higher service restoration costs from 2019 winter storms and unfavorable weather impacting electric sales were significant factors in the earnings decline.
  • 4The company plans substantial capital expenditures of $11.2 billion from 2019 through 2023, with a focus on gas and electric infrastructure upgrades.
  • 5Consumers Energy's Integrated Resource Plan (IRP) was approved, detailing a long-term strategy for reliable, affordable, and cleaner energy, including the planned retirement of coal-fueled generation.
  • 6Consolidated cash and cash equivalents stood at $334 million at June 30, 2019, with significant availability under revolving credit facilities, indicating strong liquidity.
  • 7The company continues to emphasize its 'Triple Bottom Line' strategy, focusing on environmental sustainability, operational efficiency, and customer value.

Frequently Asked Questions

The primary drivers for the decrease in net income were higher service restoration costs from the 2019 winter storms, lower electric sales primarily due to unfavorable weather, increased depreciation expenses, and lower earnings from the enterprises segment. These factors were partially offset by benefits from electric and gas rate increases and higher gas sales resulting from colder weather.

CMS Energy plans to invest approximately $11.2 billion from 2019 through 2023. The majority of this investment, around $9.3 billion, will be dedicated to maintaining and upgrading its gas and electric infrastructure to enhance safety and reliability, improve customer satisfaction, and reduce energy waste. This includes significant spending on gas transmission and storage systems, as well as electric distribution systems.

CMS Energy is actively pursuing environmental goals through its 'clean and lean' strategy, highlighted by the approval of its Integrated Resource Plan (IRP). This plan includes the retirement of coal-fueled generating units, increased use of renewable energy, and energy efficiency programs. The company has already made progress in reducing carbon emissions and water usage, and plans to continue reducing its environmental footprint.

The company maintains a strong liquidity position, with $334 million in consolidated cash and cash equivalents at June 30, 2019, and substantial availability under its revolving credit facilities. Funding for operations and capital expenditures comes from cash flows generated by operations, external financing, and stockholder contributions. Management expects these sources to be sufficient to fund contractual obligations.