CMS Energy Corporation Q3 FY2025 earnings call

Regulatory Outcomes

• Received final order for renewable energy plan approving 8 GW solar and 2.8 GW wind by 2035, ensuring meeting Michigan's clean energy law.
• Constructive gas rate case approval with ~75% of final ask and 95% of infrastructure investments approved.
• Electric rate case staff support for ~75% of revised ask and ~90% of capital ask.

Economic Growth

• Michigan has strong economic growth with 450 MW of industrial growth year-to-date out of 900 MW planned, and additional ~100 MW of signed contracts. Includes growth in data centers, manufacturing, aerospace, defense, and food processing.

Capital Plan

• Current 5-year $20 billion customer investment plan, with over $25 billion of additional investment opportunities in electric reliability, resiliency, renewable energy, and distribution system improvements. Focus on affordability through cost-saving measures like CE Way, digital, automation, and energy waste reduction.

No detailed product segment financial performance with revenue contribution % provided. Overall, CMS Energy had a strong quarter with adjusted earnings per share of $2.66 for the first 9 months of 2025, driven by constructive regulatory outcomes and favorable weather.

2025 Guidance

• Raised the bottom end of 2025 adjusted EPS guidance range to $3.56 to $3.60 per share from $3.54 to $3.60 per share, with confidence toward the high end.

2026 Guidance

• Initiated full-year guidance for 2026 at $3.80 to $3.87 per share, reflecting 6% to 8% growth from the midpoint of 2025's revised range, with confidence toward the high end.

Risks

• Regulatory risks: Changes in regulatory environment could impact rate cases and investment outcomes.
• Affordability risks: Balancing customer investments with keeping utility bills affordable.
• Weather-related risks: Impact on energy demand and costs due to variable weather patterns.

Q: Elaborate on the timing of the large load tariff and data center opportunities.

A: The large load tariff is expected in November. There are 3 large data centers in the final stages, with one near final terms and conditions, and others in advanced stages of development.

Q: When and how will the $25B+ of investment opportunities be folded into the plan?

A: Some will filter into the next 5-year plan, including electric reliability improvements, renewable energy investments, and Integrated Resource Plan (IRP)-related spending.

Q: What is the excess capacity for serving the growing economic load?

A: Current capacity to serve the load, with renewables and battery storage projects underway to expand capacity.

Q: What about the maintenance and accounting for the Campbell plant if it runs through 2028?

A: Costs are treated as a regulatory asset, and Michigan customers will be refunded for their share of investments as recovery from MISO North and Central customers is established.

Q: How is the mix between self-build and PPA in the renewable energy plan?

A: There's a mix of self-build and PPA, with assumptions of ~50-50 ownership for solar and higher ownership for wind, with flexibility based on competitive bidding.

Q: Details on manufacturing growth in Michigan?

A: Growth includes aerospace, defense, food processing, and agriculture-related manufacturing, with Michigan having a robust pipeline in these areas.

Q: Timeline for data center ramp?

A: One data center ramps late 2029/early 2030, with others ramping earlier in the 5-year window.

Q: Incremental equity needed for incremental CapEx?

A: Historical sensitivity is ~$0.40 of common equity per dollar of CapEx, with tax credits and PPA earnings used to mitigate equity needs.