10-QPeriod: Q2 FY2015

DTE ENERGY CO Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 24, 2015For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Company reported a decrease in net income for both the three and six-month periods ended June 30, 2015, compared to the same periods in 2014. This decline was primarily driven by reduced earnings in the Electric and Power & Industrial Projects segments, although partially offset by improvements in the Gas Storage & Pipelines and Energy Trading segments. Despite the year-over-year dip in net income, the company's utility businesses continue to invest significantly in infrastructure, new generation, and environmental compliance, which are expected to drive future earnings growth. The company's financial position remains solid, with sufficient liquidity and access to capital markets. DTE Energy's strategy focuses on long-term earnings growth, maintaining a strong balance sheet, and delivering an attractive dividend yield, supported by a constructive regulatory environment. The company is navigating industry changes, including regulatory initiatives related to climate change, and is actively managing environmental compliance costs.

Financial Highlights

49 data points
Beta

Revenue

$2.27B

Net Income

$109.00M

4.8% Net Margin

EPS (Diluted)

$0.61

Total Assets

$28.35B

Cash & Equivalents

$230.00M

Free Cash Flow

$433.00M

Financial Statements
Beta
Revenue$2.27B
Operating Expenses$2.06B
Operating Income$204.00M
Interest Expense$115.00M
Net Income$109.00M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)179.00M
Shares Outstanding (Diluted)179.00M

Key Highlights

  • 1DTE Energy reported a decrease in net income for the three months ended June 30, 2015 ($109 million) and the six months ended June 30, 2015 ($382 million) compared to the prior year periods.
  • 2Operating revenues also declined year-over-year for both the three months ($2,268 million vs $2,698 million) and six months ($5,252 million vs $6,628 million) ended June 30, 2015.
  • 3The Electric segment's gross margin decreased due to lower securitization bond and tax surcharges, base sales, and a PSCR disallowance.
  • 4DTE Electric acquired a 732 MW simple-cycle natural gas facility for approximately $241 million in January 2015.
  • 5DTE Electric self-implemented a rate increase of $230 million in July 2015 as part of its 2014 electric rate case filing.
  • 6The company maintained a strong liquidity position with approximately $2.2 billion in available liquidity at June 30, 2015.
  • 7Capital investments in utility businesses are planned to continue, focusing on infrastructure, new generation, and environmental compliance.

Frequently Asked Questions

The decrease in net income in the second quarter of 2015 compared to the second quarter of 2014 was primarily due to decreased earnings in the Electric and Power & Industrial Projects segments. This was partially offset by improved earnings in the Gas Storage and Pipelines and Energy Trading segments.

DTE Energy is subject to extensive environmental regulations and is actively managing compliance costs. The company has spent billions on emission controls and estimates significant future capital expenditures for environmental compliance. These costs are expected to be recovered through rates charged to customers via regulatory mechanisms.

DTE Electric plans significant capital investments over the 2015-2019 period, estimated at $5.7 billion for base infrastructure, $1.4 billion for new generation, and $400 million for environmental compliance. The company also plans to retire a portion of its coal-fired generation and increase its reliance on natural gas and renewables.

DTE Energy manages market risk through various strategies. For its regulated utility businesses, changes in commodity prices are often recoverable through regulatory mechanisms. For its non-utility segments, such as Energy Trading, the company uses derivative instruments like forwards, futures, options, and swaps to manage exposure to commodity price, interest rate, and foreign currency exchange rate fluctuations.