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CMS ENERGY CORP 8-K Report, Financial Results (Feb 1, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed February 1, 2024
Period End
February 1, 2024
In the record · 2016–202610-K1110-Q328-K151

CMS filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 151 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Aug ’17Aug ’17
  2. Material agreement8-K · Nov ’19Nov ’19
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed February 1, 2024. Cited figures are marked; the original filing is the authoritative source.

CMS Energy reported 2023 diluted GAAP EPS of $3.01a (up from $2.85 in 2022) and adjusted EPS of $3.11 (up from $2.89), landing toward the high end of its guidance range despite unfavorable weather and significant storms.

Net income available to common stockholders rose to $877 millionb from $827 million. Fourth-quarter adjusted EPS was $1.05 versus $0.60 a year earlier, and the company's utility segment was the main driver of earnings growth, with the NorthStar Clean Energy and corporate segments weighing modestly on results. Management raised 2024 adjusted EPS guidance to $3.29–$3.35 from $3.27–$3.33 and reaffirmed long-term adjusted EPS growth of 6% to 8%, with continued confidence toward the high end.

The board increased the annual dividend by 11 cents to $2.06c per share, the 18th consecutive annual increase, and the company targets a payout ratio of about 60% over time. The utility capital plan for 2024–2028 was increased to $17 billion, up $1.5 billion from the prior plan, with roughly 63% directed to electric utility investment. Management also cited a new Michigan energy law and a 2023 electric rate case filing requesting $136 million with a 10.25% ROE as supports for future earnings visibility.

For investors, the key takeaways are the steady earnings trajectory, a higher capital plan that supports rate base growth from about $24.6 billion to $35.2 billiond, and a financing plan that avoids new equity until 2025. Cash flow from operations improved sharply to $2.3 billion in 2023 from $855 million in 2022, though this was partly helped by working capital and the absence of the prior year's discretionary pension contributions. Long-term debt grew and securitization debt increased, so leverage and credit metrics remain key items to monitor.

02—Key points

Key Highlights

  1. 2023 diluted GAAP EPS of $3.01 and adjusted EPS of $3.11, up from $2.85 and $2.89 in 2022, toward the high end of guidance.
  2. 2024 adjusted EPS guidance raised to $3.29–$3.35 from $3.27–$3.33; long-term adjusted EPS growth of 6%–8% reaffirmed with confidence toward the high end.
  3. Annual dividend increased 11 cents to $2.06 per share, the 18th consecutive annual increase, with a targeted payout ratio of about 60% over time.
  4. Utility capital plan for 2024–2028 increased to $17 billion, up $1.5 billion from the prior plan, supporting rate base growth from $24.6 billion (2023) to $35.2 billion (2028).
  5. Operating cash flow rose to $2.3 billion in 2023 from $855 million in 2022, though net income growth was modest (net income to common of $877 million vs. $827 million).
  6. No new equity planned until 2025, with up to $350 million per year of equity issuance expected in 2025–2028.
  7. Unfavorable weather and significant storms in 2023 created roughly $300 million of headwinds, which management said it countermeasured.

03—Questions

Frequently Asked Questions

  1. How did CMS Energy perform in 2023 relative to its guidance?

    CMS reported diluted GAAP EPS of $3.01 and adjusted EPS of $3.11 for 2023, up from $2.85 and $2.89 in 2022. Management said adjusted EPS landed toward the high end of its guidance range of $3.06–$3.12, despite unfavorable weather and storms.

  2. What is the outlook for 2024 earnings and dividends?

    The company raised 2024 adjusted EPS guidance to $3.29–$3.35 from $3.27–$3.33 and reaffirmed long-term adjusted EPS growth of 6%–8%, with confidence toward the high end. The annual dividend was increased to $2.06 per share for 2024, and the company targets a payout ratio of about 60% over time.

  3. What is driving future growth in the utility business?

    The utility capital plan for 2024–2028 is $17 billion, up $1.5 billion from the prior plan, with about 63% in electric utility investment. Management expects rate base to grow from about $24.6 billion in 2023 to $35.2 billion in 2028, aided by a new Michigan energy law, constructive rate outcomes, and an electric rate case filed in December 2023 requesting $136 million at a 10.25% ROE.

  4. Does CMS Energy plan to issue new equity, and how is it funding its plan?

    The company plans no new equity until 2025, after settling contracted equity forwards in 2023 and January 2024. It expects to issue up to $350 million per year in 2025–2028. Planned 2024 financings include $1.1 billion of Consumers Energy first mortgage bonds (with $600 million reported as already issued) and about $1.9 billion of net liquidity.

  5. What are the main risks or items investors should watch?

    Weather and storm volatility affected 2023 results, and 2024 sensitivities show earnings are sensitive to electric and gas volumes, ROE, and interest rates. Net income growth lagged EPS growth in some periods, and the company's leverage and credit metrics are key given rising debt and a larger capital plan. Adjusted EPS excludes items such as voluntary separation program costs and NorthStar-related mark-to-market adjustments, so investors should also review reported GAAP results.

04—Continue

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