10-QPeriod: Q3 FY2021

CMS ENERGY CORP Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 28, 2021For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corp. reported solid financial performance for the nine months ended September 30, 2021, with net income available to common stockholders increasing to $711 million, or $2.46 per diluted share, compared to $597 million, or $2.09 per diluted share, in the prior year period. This growth was driven by rate increases in both the electric and gas utilities and higher electric sales, which offset increased operating expenses and taxes. A significant event during the period was the completion of the merger of EnerBank with Regions Bank on October 1, 2021, which is expected to result in a pre-tax gain of approximately $660 million in the fourth quarter of 2021 and provided CMS Energy with approximately $1.0 billion in proceeds. These proceeds are earmarked for crucial initiatives within the core energy business, focusing on safety, reliability, and the company's clean energy transformation. Looking ahead, CMS Energy and its subsidiary Consumers Energy are actively progressing with their long-term clean energy strategies. The proposed 2021 Integrated Resource Plan (IRP) aims to accelerate the transition away from coal-fired generation, with plans to retire all coal units by the end of 2025 and achieve net-zero carbon emissions from its electric business by 2040. Significant capital investments are planned to support infrastructure upgrades, reliability enhancements, and the expansion of renewable energy sources. The company also remains committed to its "CE Way" operating model, focusing on efficiency, safety, and customer service, while balancing environmental, social, and governance (ESG) factors.

Financial Highlights

46 data points
Beta

Revenue

$1.73B

Net Income

$189.00M

11.0% Net Margin

EPS (Diluted)

$0.64

Total Assets

$30.51B

Cash & Equivalents

$102.00M

Free Cash Flow

-$448.00M

Financial Statements
Beta
Revenue$1.73B
Operating Expenses$1.47B
Operating Income$260.00M
Interest Expense$125.00M
Net Income$189.00M
EPS (Basic)$0.64
EPS (Diluted)$0.64
Shares Outstanding (Basic)289.10M
Shares Outstanding (Diluted)289.60M

Key Highlights

  • 1Net income available to common stockholders increased to $711 million for the nine months ended September 30, 2021, up from $597 million in the same period last year, reflecting improved operational performance and rate adjustments.
  • 2The sale of EnerBank to Regions Bank was completed on October 1, 2021, yielding approximately $1.0 billion in proceeds and is expected to generate a pre-tax gain of $660 million in Q4 2021, which will be reinvested in core energy initiatives.
  • 3Consumers Energy's 2021 Integrated Resource Plan (IRP) proposes significant acceleration of its clean energy transition, including the retirement of all coal-fired generation by the end of 2025 and a goal of net-zero carbon emissions by 2040.
  • 4The company plans substantial capital investments of $25 billion over the next ten years, with a focus on infrastructure upgrades, reliability improvements, and the expansion of renewable energy generation.
  • 5Despite increased operating expenses and property taxes due to higher capital spending, the company has maintained strong financial health, with debt-to-capital ratios well within covenants.
  • 6CMS Energy demonstrated a commitment to environmental stewardship, with significant reductions in carbon dioxide emissions (over 35% since 2005) and progress towards renewable energy standards.
  • 7The company continues to focus on operational efficiency and cost control through its 'CE Way' lean operating model, which contributed to over $40 million in cost reductions during 2021.

Frequently Asked Questions

For the nine months ended September 30, 2021, CMS Energy reported a net income available to common stockholders of $711 million, or $2.46 per diluted share, an increase from $597 million, or $2.09 per diluted share, in the same period of 2020. This improvement was driven by rate increases and higher electric sales, partially offset by increased operating expenses.

The most significant event was the completion of the merger of EnerBank with Regions Bank on October 1, 2021. This transaction is expected to result in a pre-tax gain of approximately $660 million in the fourth quarter of 2021 and provided CMS Energy with approximately $1.0 billion in proceeds, which will be used to fund core energy business initiatives.

CMS Energy, through Consumers Energy, is advancing a Clean Energy Plan outlined in its 2021 Integrated Resource Plan (IRP). Key elements include retiring all coal-fired generation by the end of 2025, acquiring natural gas-fueled generation units to ensure grid reliability during the transition, and significantly expanding renewable energy capacity, aiming for net-zero carbon emissions from its electric business by 2040.

Consumers Energy plans to invest approximately $25 billion over the next ten years, with a significant portion of that allocated to infrastructure upgrades, electric distribution systems, and new clean generation. Over the next five years, capital expenditures are expected to be around $13.2 billion, inclusive of over $1 billion for updates proposed in the 2021 IRP.