01—Abstract
Summary
Summary of the 8-K filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.
CMS Energy reported second-quarter 2024 reported EPS of $0.65a, down from $0.67 a year earlier, and adjusted EPS of $0.66, down from $0.75.
The year-over-year decline in the quarter was driven by the absence of the prior-year $0.09b voluntary separation program benefit and the net effect of other items, while year-to-date results improved meaningfully: reported EPS rose to $1.61 from $1.36 and adjusted EPS rose to $1.63 from $1.45, attributed to constructive regulatory outcomes and higher weather-normalized sales. Net income available to common stockholders was $195 million in Q2 2024, flat with Q2 2023, and $480 million for the first six months, up from $397 million. Management reaffirmed full-year 2024 adjusted EPS guidance of $3.29 to $3.35 and long-term adjusted EPS growth of 6% to 8%, with continued confidence toward the high end of the range.
The presentation (Exhibit 99.2) indicates a $17 billionc utility capital plan for 2024 to 2028, up $1.5 billion from the prior plan, and a rate base projected to grow from $24.6 billion in 2023 to $35.2 billion in 2028. Management also highlighted a Michigan rate case order of $92 million at a 9.9% ROE in March 2024 and a settlement approved in July 2024 providing $62.5 million of effective rate relief at a 9.9% ROE. Balance sheet activity showed cash and equivalents rising to $699 million at June 30, 2024 from $227 million at year-end 2023, and total assets increasing to $34.4 billion.
Management cited approximately $2.5 billiond of net liquidity and planned financings including $600 million of Consumers Energy first mortgage bonds in the year. Investors should note that the filing is a earnings disclosure, and the company does not provide reported EPS guidance because it cannot forecast specific items that could materially affect GAAP results.
02—Key points
Key Highlights
- Q2 2024 adjusted EPS of $0.66 versus $0.75 in Q2 2023; reported EPS of $0.65 versus $0.67, with the prior-year quarter boosted by a $0.09 voluntary separation program charge that was excluded from adjusted results.
- First-half 2024 adjusted EPS of $1.63, up 12% from $1.45, and reported EPS of $1.61, up from $1.36, driven by constructive regulatory outcomes and higher weather-normalized sales.
- Full-year 2024 adjusted EPS guidance of $3.29 to $3.35 reaffirmed, with management expressing continued confidence toward the high end; long-term adjusted EPS growth target of 6% to 8% maintained.
- Utility capital plan raised to $17 billion for 2024 to 2028, up $1.5 billion from the prior plan, supporting rate base growth from $24.6 billion (2023) to $35.2 billion (2028), a roughly 7.5% CAGR.
- Michigan regulatory progress: a $92 million rate order at a 9.9% ROE (March 2024) and a $62.5 million settlement at a 9.9% ROE (July 2024), plus a pending electric rate case filed May 31, 2024 seeking $325 million at a 10.25% ROE.
- Liquidity and financing: cash and equivalents of $699 million at June 30, 2024 and approximately $2.5 billion of net liquidity; planned 2024 financings include Consumers Energy first mortgage bonds and CMS equity issuance of roughly $266 million.
- Quarterly net income available to common stockholders was flat at $195 million, while operating income rose 16% to $283 million, partly offset by higher interest charges of $173 million versus $160 million.
03—Questions
Frequently Asked Questions
Why did CMS Energy's adjusted EPS decline in Q2 2024 even though year-to-date results improved?
The Q2 2023 comparison included a $0.09 per share voluntary separation program charge that was excluded from adjusted earnings, so the prior-year adjusted figure was $0.75. Q2 2024 adjusted EPS of $0.66 reflects lower other income ($113 million versus $146 million) and higher interest charges, partly offset by higher operating income. Year-to-date adjusted EPS still rose to $1.63 from $1.45 because of constructive regulatory outcomes and stronger weather-normalized sales in the first quarter.
Is CMS Energy on track to meet its 2024 earnings guidance?
Management reaffirmed 2024 adjusted EPS guidance of $3.29 to $3.35 and said it is on track, with continued confidence toward the high end. The presentation shows first-half adjusted EPS of $1.63 and outlines expected second-half drivers, including weather, rates and investment cost savings, and usage, with a projected six-month range of $0.00 to $0.06 to go. Note that the company does not provide reported (GAAP) EPS guidance.
What are the main drivers of CMS Energy's long-term growth outlook?
The company targets 6% to 8% adjusted EPS growth and a dividend per share growth rate in line with that range, with a dividend payout of about 60% over time. Growth is driven by a $17 billion utility capital plan for 2024 to 2028, with about 63% in electric utility investment and roughly 40% supporting the clean energy transformation. Management also cited re-contracting opportunities at NorthStar and clean energy PPA capacity payments as additional drivers.
How is the company's balance sheet and liquidity position?
At June 30, 2024, cash and equivalents were $699 million, up from $227 million at year-end 2023, and total capitalization excluding securitization debt was $23.5 billion. Management cites approximately $2.5 billion of net liquidity and credit ratings in the investment-grade range, including A (Consumers Energy senior secured) and BBB (CMS Energy senior unsecured) with stable outlooks. Planned 2024 financings focus on funding customer investments, including Consumers Energy first mortgage bonds.
What regulatory developments could affect future earnings?
Consumers Energy has a pending electric rate case filed May 31, 2024, requesting $325 million at a 10.25% ROE, with an order expected by March 31, 2025 (case U-21585). A gas rate case is planned for December 2024, and a renewable energy plan filing is expected in November 2024. Outcomes in these proceedings, along with the constructive ROE levels already approved, will significantly influence future earnings growth.
04—Continue