10-QPeriod: Q1 FY2016

DTE ENERGY CO Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 26, 2016For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Company reported net income attributable to DTE Energy of $247 million for the first quarter of 2016, a decrease from $273 million in the same period of 2015. This decline was primarily attributed to lower earnings in the Gas, Power and Industrial Projects, and Electric segments, partially offset by improved results in the Corporate and Other segment. Diluted earnings per share were $1.37, down from $1.53 year-over-year. Operationally, total operating revenues decreased to $2.57 billion from $2.98 billion in the prior year's quarter. The company is focused on capital investments to improve customer reliability and comply with environmental regulations, with significant planned expenditures for both utility and non-utility businesses. DTE Energy maintains a strong balance sheet and adequate liquidity, with available resources to fund anticipated capital and operating requirements. The company is navigating a dynamic energy industry and aims for long-term earnings growth through operational excellence, cost optimization, and strategic investments.

Financial Highlights

49 data points
Beta

Revenue

$2.57B

Net Income

$247.00M

9.6% Net Margin

EPS (Diluted)

$1.37

Total Assets

$28.56B

Cash & Equivalents

$35.00M

Free Cash Flow

$745.00M

Financial Statements
Beta
Revenue$2.57B
Operating Expenses$2.19B
Operating Income$381.00M
Interest Expense$113.00M
Net Income$247.00M
EPS (Basic)$1.38
EPS (Diluted)$1.37
Shares Outstanding (Basic)179.00M
Shares Outstanding (Diluted)180.00M

Key Highlights

  • 1Net income attributable to DTE Energy Company decreased to $247 million ($1.37 per diluted share) in Q1 2016 from $273 million ($1.53 per diluted share) in Q1 2015.
  • 2Total operating revenues declined to $2.57 billion in Q1 2016 from $2.98 billion in Q1 2015, primarily driven by lower utility and non-utility operations.
  • 3The Electric segment, primarily DTE Electric, reported net income of $127 million, a slight decrease from $136 million in the prior year period.
  • 4The Gas segment's net income decreased to $87 million from $111 million, impacted by lower gross margins due to weather and midstream revenue changes.
  • 5Significant capital expenditures are planned for utility infrastructure improvements and environmental compliance, with an estimated $8.2 billion for DTE Electric and $1.6 billion for DTE Gas from 2016-2020.
  • 6DTE Energy maintained a strong balance sheet, with a total funded debt to capitalization ratio of 0.50 to 1 at March 31, 2016, well within its covenant limit.
  • 7The company has approximately $1.6 billion of available liquidity at March 31, 2016, comprised of cash and amounts available under unsecured revolving credit agreements.

Frequently Asked Questions

The primary reason for the decrease in net income was lower earnings across the Gas, Power and Industrial Projects, and Electric segments. This was partially offset by improved results in the Corporate and Other segment.

DTE Energy expects to fund its significant capital investments through internally generated cash flows and the issuance of debt and equity. For utility capital expenditures, the company plans to seek regulatory approval to include these costs in their rate base.

DTE Energy operates in a constructive regulatory environment and has solid relationships with its regulators. A key priority is maintaining regulatory stability and ensuring investment recovery for its electric and gas utilities.

DTE Electric is subject to extensive EPA regulations concerning air emissions (SO2, NOx, mercury, CO2) and coal combustion residuals. Future legislation and regulatory actions regarding climate change and environmental compliance could lead to material impacts, including expenditures for pollution control equipment, higher operating costs, and potential facility retirements. The company expects to recover these environmental costs through rates charged to customers.