CMS Energy Corporation 5.6% JRSUB NT 78 Q1 FY2025 earnings call

• Storm Response: Crews prepared for historic storms in late March and early April, with 500 crews prestaged and 900 total crews dispatched, restored customers safely and quickly, and supported local co-op utility customers. Saw favorable customer and policymaker support.
• Regulatory Environment: Pleased with March electric rate order, approximately 65% of revised ask, solid support for electric reliability investments. Gas rate case has constructive starting position. REP expected mid-September, feeds into IRP to be filed next year.
• Economic Development: Data center pipeline grew to 9 gigawatts post-elimination of sales and use taxes for data centers, with about 65% toward data centers. Manufacturing growth in pipeline with secondary and tertiary benefits.
• Financials: Adjusted net income of $304 million or $1.02 per share for Q1, reaffirming full-year guidance of $3.54 to $3.60 per share with confidence toward the high end, and long-term guidance for adjusted EPS growth 6%-8% toward the high end.

In the first quarter, CMS Energy reported adjusted earnings per share of $1.02. There is no detailed breakdown of specific product segments provided in terms of absolute revenue and contribution % beyond general electric and gas businesses.

• Reaffirmed full-year guidance of $3.54 to $3.60 per share with confidence toward the high end.
• Long-term guidance for adjusted EPS growth remains in the range of 6% to 8% toward the high end.
• Discussed financing plans, including $1 billion of junior subordinated notes issued, and storm-related accounting deferral filing.
• Anticipated normal weather for positive variance in remaining nine months, and regulatory positive variance from electric rate order and gas rate case.

• Potential changes in the Inflation Reduction Act (IRA), including impact on renewable tax credits and transferability.
• Tariff impacts on renewable projects and supply chain.
• Weather-related costs, such as the historic storm in late March/early April with estimated $100 million O&M expense.
• Regulatory uncertainties in gas rate case and other filings.

Q: Focus on NorthStar, percentage of capital, IRA impact?

A: NorthStar is 5% of the EPS mix. There is no storage investment. Panels are secured through 2030 with contracts, and there's safe harbor on main power transformers out to 2028. Regarding IRA, there's ongoing conversation on support for tax credits and transferability.

Q: Deferred accounting order on storm cost?

A: Filed ex parte with the commission, having constructive conversations with staff and commissioners. It's atypical but justified due to the historic nature of the storm.

Q: Gas rate case, settlement appetite?

A: Staff has a constructive starting position. CMS Energy is open to settlement, will push on ROEs during the process, and is confident in delivering constructive outcomes as in prior cases Q: How are you thinking about the risk of transferability potentially going away?

A: There's ongoing conversation with Republicans on supporting PTCs and ITCs with transferability. In the unlikely event of transferability going away, options include more junior subordinated notes, additional equity, and leveraging energy law and PPAs for flexibility.

Q: On the electric rate case, lessons learned?

A: Need to improve mix of capital and O&M, increase vegetation management, and improve bucketing for transparency in filings.