10-QPeriod: Q1 FY2015

DTE ENERGY CO Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 24, 2015For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Co. (DTE) reported its first quarter 2015 results, showing a decrease in net income attributable to DTE Energy Company to $273 million from $326 million in the same period of 2014. This decline was primarily driven by lower earnings in the Gas and Energy Trading segments, partially offset by increased earnings in the Power and Industrial Projects and Gas Storage and Pipelines segments. Diluted earnings per share also decreased to $1.53 from $1.84 year-over-year. The company's utility operations, DTE Electric and DTE Gas, are regulated and require significant capital investments for infrastructure maintenance and environmental compliance. DTE Electric's rate case filing for a $370 million increase in base rates is underway, with a final order expected in late 2015. DTE Energy continues to focus on operational excellence, cost optimization, and strategic growth opportunities, particularly in the Gas Storage and Pipelines and Power and Industrial Projects segments, while maintaining a strong balance sheet and liquidity.

Financial Highlights

49 data points
Beta

Revenue

$2.98B

Net Income

$273.00M

9.1% Net Margin

EPS (Diluted)

$1.53

Total Assets

$28.07B

Cash & Equivalents

$99.00M

Free Cash Flow

$747.00M

Financial Statements
Beta
Revenue$2.98B
Operating Expenses$2.52B
Operating Income$461.00M
Interest Expense$110.00M
Net Income$273.00M
EPS (Basic)$1.53
EPS (Diluted)$1.53
Shares Outstanding (Basic)178.00M
Shares Outstanding (Diluted)178.00M

Key Highlights

  • 1Net income attributable to DTE Energy Company decreased to $273 million for Q1 2015, down from $326 million in Q1 2014.
  • 2Diluted earnings per share decreased to $1.53 in Q1 2015, compared to $1.84 in Q1 2014.
  • 3The Electric segment's gross margin decreased by $101 million year-over-year, primarily due to lower securitization bond and tax surcharge revenues.
  • 4The Gas segment's gross margin decreased by $25 million, attributed mainly to weather impacts and lower midstream storage and transportation revenues.
  • 5The Energy Trading segment reported a net loss of $9 million, a significant decrease from a net income of $42 million in the prior year's quarter, impacted by lower commodity prices and trading strategies.
  • 6DTE Electric is seeking a $370 million increase in base rates through a rate case filed in December 2014.
  • 7The company acquired a 732 MW simple-cycle natural gas facility in Carson City, Michigan, for approximately $240 million in January 2015.

Frequently Asked Questions

The decrease in net income to $273 million in Q1 2015 from $326 million in Q1 2014 was primarily due to decreased earnings in the Gas and Energy Trading segments. Lower commodity prices and less favorable trading strategies impacted these segments, while the Electric segment's gross margin also declined.

DTE Electric plans significant capital investments totaling approximately $5.7 billion for base infrastructure, $1.4 billion for new generation, and $400 million for environmental compliance between 2015 and 2019. DTE Gas plans approximately $1 billion for base infrastructure and $600 million for gas main renewal and pipeline integrity programs over the same period.

DTE Electric filed a rate case on December 19, 2014, requesting an increase in base rates of $370 million. New rates could be self-implemented in July 2015, with a final order from the MPSC expected in December 2015.

The Energy Trading segment is exposed to price fluctuations in electricity, natural gas, coal, and foreign currency. The company manages this risk through various derivative instruments such as forward energy contracts, capacity, storage, options, and futures contracts, operating within predetermined risk parameters. While significant portions of the portfolio are economically hedged, earnings volatility can occur due to the mark-to-market accounting of derivatives versus non-derivative underlying assets.