CMS Energy Corporation 5.6% JRSUB NT 78 Q4 FY2025 earnings call

• Large load tariff approved in November, providing certainty for data centers and benefits for existing customers. • 20-year renewable energy plan approved, offering ~$14 billion in customer investment opportunity by 2040. • Gas business prepared for winter, with investments over $1 billion to enhance storage and delivery infrastructure. • 5-year $24 billion utility customer investment plan, up $4 billion from prior plan, including increased electric generation, distribution system strengthening, and gas investments. • Progress on data centers, with near final terms on rate agreements and ongoing work on zoning.

In 2025, CMS Energy exceeded adjusted earnings per share guidance, delivering $3.61 per share. The utility segment was a key driver, with plans for 2026 adjusted EPS guidance ranging from $3.83 to $3.90 (6%-8% growth). North Star Clean Energy is expected to contribute $0.25 to $0.30 per share in EPS, incorporating normalized operations at Dearborn Industrial Generation (DIG) and renewable projects.

• 2026 adjusted EPS guidance raised to $3.83 to $3.90 (6%-8% growth off 2025 actuals). • Reaffirmed long-term guidance of 6%-8% toward the high end. • Target to grow dividend with a payout ratio of ~55% over time. • $24 billion 5-year utility customer investment plan, supporting 10.5% rate base growth through 2030.

• Regulatory uncertainties related to rate cases and potential impacts on earnings. • Weather-related risks affecting utility operations and financial results. • Market conditions impacting financing costs and equity issuances.

Q: Can you provide more detail on the data center opportunity in Michigan?

A: Garrick Rochow stated progress on data centers, with near final terms on rate agreements and ongoing work on zoning, expecting some data centers online as early as 2028.

Q: How does the 6%-8% guidance align with the 10.5% rate base growth?

A: Rejji Hayes explained that the 6%-8% guide accounts for equity issuance needs and parent refinancing costs, bridging from a higher rate base growth to the lower guidance range.

Q: Thoughts on the pending electric rate case and expected ROE?

A: Garrick Rochow expressed confidence in a constructive outcome, expecting an ROE of 9.9% or better, citing the track record of constructive regulatory outcomes and alignment with industry standards.

Q: How does the equity issuance plan align with CapEx needs?

A: Rejji Hayes noted that equity needs increase with CapEx, with a historical ratio of $0.40 of equity per $1 of incremental CapEx, and plans to issue ~$700 million in 2026 with opportunistic issuance based on market conditions.

Q: Impact of data centers on the customer investment plan?

A: Garrick Rochow clarified that data center growth is incremental and not included in the formal $24 billion customer investment plan, but efforts are underway to accommodate such growth while maintaining customer affordability.