10-QPeriod: Q3 FY2019

DTE ENERGY CO Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 28, 2019For Securities:DTEDTKDTBDTGDTW

Summary

DTE Energy Company (DTE) reported its financial results for the quarter and nine months ended September 30, 2019. For the third quarter, net income attributable to DTE Energy Company was $319 million, or $1.73 per diluted share, compared to $334 million, or $1.84 per diluted share, in the same period of 2018. For the nine-month period, net income was $902 million, or $4.91 per diluted share, down from $929 million, or $5.13 per diluted share, in the prior year. The decrease in net income for both periods was primarily driven by lower earnings in the Gas, Gas Storage and Pipelines, and Power and Industrial Projects segments, partially offset by higher earnings in the Electric and Corporate and Other segments. Despite the year-over-year declines, the company highlighted its strategic focus on long-term earnings growth, a strong balance sheet, and an attractive dividend yield. Management expressed confidence in its ability to navigate the evolving energy landscape and achieve growth through disciplined capital investments in both its utility and non-utility businesses.

Financial Highlights

46 data points
Beta

Net Income

$319.00M

EPS (Diluted)

$1.73

Total Assets

$38.34B

Cash & Equivalents

$76.00M

Free Cash Flow

$534.00M

Financial Statements
Beta
Operating Expenses$2.67B
Operating Income$450.00M
Interest Expense$162.00M
Net Income$319.00M
EPS (Basic)$1.74
EPS (Diluted)$1.73
Shares Outstanding (Basic)183.00M
Shares Outstanding (Diluted)184.00M

Key Highlights

  • 1Net income attributable to DTE Energy Company decreased to $319 million for Q3 2019 from $334 million in Q3 2018, and to $902 million for the nine months ended September 30, 2019, from $929 million in the prior year.
  • 2Diluted Earnings Per Share (EPS) decreased to $1.73 in Q3 2019 from $1.84 in Q3 2018, and to $4.91 for the nine months ended September 30, 2019, from $5.13 in the prior year.
  • 3The Electric segment, primarily DTE Electric, showed resilience with stable net income for the quarter ($307 million vs. $305 million) and a slight decrease for the nine months ($587 million vs. $608 million), driven by increased utility margin from new rates, partially offset by lower sales and higher depreciation.
  • 4The Gas segment reported a net loss of $38 million for Q3 2019, compared to a net loss of $30 million in Q3 2018, and a net income of $121 million for the nine months, down from $88 million in the prior year, impacted by weather and regulatory mechanisms.
  • 5The Gas Storage and Pipelines segment experienced a decrease in net income to $60 million for Q3 2019 from $66 million in Q3 2018, and to $158 million for the nine months from $188 million, mainly due to decreased earnings from pipeline investments and changes in noncontrolling interests.
  • 6Power and Industrial Projects segment's net income attributable to DTE Energy Company decreased to $49 million in Q3 2019 from $58 million in Q3 2018, and to $104 million for the nine months from $146 million, largely due to sales of membership interests and project terminations.
  • 7DTE Energy announced a significant subsequent event: an agreement to acquire midstream natural gas assets for approximately $2.65 billion, expected to close in December 2019, which will be financed through equity and debt issuances.

Frequently Asked Questions

The primary driver for the decrease in net income was lower earnings in the Gas, Gas Storage and Pipelines, and Power and Industrial Projects segments. These declines were partially offset by higher earnings in the Electric and Corporate and Other segments.

DTE Electric demonstrated stable performance. For the third quarter, net income was $307 million compared to $305 million in the prior year. For the nine months, net income was $587 million, down slightly from $608 million in the prior year. This stability was supported by an increased utility margin driven by new rates and regulatory mechanisms, though partially offset by lower sales volumes and increased depreciation expenses.

DTE Energy announced a subsequent event: an agreement to acquire midstream natural gas assets from Momentum Midstream and Indigo Natural Resources for approximately $2.65 billion. This acquisition, expected to close in December 2019, will expand its non-utility Gas Storage and Pipelines business and will be financed through equity and debt issuances.

DTE Energy has accelerated its carbon emission reduction goals, aiming for at least a 50% reduction by 2030 and an 80% reduction by 2040 from 2005 levels. Furthermore, they announced a net-zero carbon emissions goal by 2050 for DTE Electric. The company plans to achieve these reductions by transitioning away from coal-fired power plants and increasing the use of renewables, energy efficiency, and natural gas generation.