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CMS Energy Q1 2010 Earnings Call Transcript

CMS Energy Q1 2010 Earnings Call Transcript

CMS Energy (CMS)

Q1 2010 Earnings Call

April 23, 2010 9:00 am ET


Laura Mountcastle - Vice President and Treasurer.

David Joos - President and CEO

John Russell - President and COO for Consumers

Thomas Webb - Executive Vice President and CFO.


Daniel Eggers - Credit Suisse Securities LLC

Paul Ridzon - KeyBanc Capital Markets

Steven Fleishman - BofA Merrill Lynch

Lauren Duke - Deutsche Bank

Ali Agha - SunTrust Robinson Humphrey

Brian Russo - Ladenburg Thalmann & Co. Inc.

Analyst for John Quealy - Canaccord Adams

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Good morning everyone, and welcome to the CMS Energy 2010 first quarter results and outlook call. This call is being recorded. Just a reminder, there will be a rebroadcast of the conference call today beginning at 12:00 pm EST and running through April 30. This presentation is also being webcast and is available on CMS Energy’s website in the investor relations section. At this time, I would like to turn the call over to Ms. Laura Mountcastle, Vice President and Treasurer.

Laura Mountcastle

Good morning and thank you for joining us today. With me are Dave Joos, President and CEO, John Russell, President and COO for Consumers, and Tom Webb, Executive Vice President and CFO. Our earnings press release issued earlier today and the presentation used in this webcast are available on our website at

This presentation contains forward looking statements. These statements are subject to risks and uncertainties and should be read in conjunction with our Form 10-Ks and 10-Qs. The forward looking statements and information and risk factors section discuss important factors that could cause results to differ materially from those anticipated in such statements.

This presentation also includes non-GAAP measures. A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted in the investor section of our website. We expect 2010 reported earnings to be about the same as adjusted earnings. Reported earnings could vary because of several factors. We are not providing reported earnings guidance reconciliation because of the uncertainties associated with those factors. Now, I’ll turn the call over to Dave.

David Joos

I’ll start the presentation with a few brief remarks about the quarter before I turn the call over to John Russell, who’ll give you an update on the business and regulatory agenda, and then Tom Webb will take you through a more detailed discussion on the financial results and the outlook for the remainder of the year. Then we’ll close with questions and answers.

First quarter 2010 adjusted earnings were $0.38 a share, up $0.07 or 22% from 2009. The increase was primarily due to the effect of the rate release on both the electric and gas sides of the business, partly offset by unseasonable warm weather and other items Tom will discuss in more detail in a few minutes.

For the full year we expect adjusted earnings of $1.35 a share, unchanged from our previous guide. Although it’s old news to almost everyone, we raised our dividend 20% in the first quarter of 2010 to an annualized $0.60 a share, reflecting the confidence our board has in the business plan and the progress we’ve made over the past year.

I’m going to turn the call over to John Russell, but before I do I want to make a few comments about the transition of leadership here at the company. Ken Whipple, our current Chairman, has reached our mandatory retirement age and will step down from the board at our annual meeting on May 21. Ken has been an outstanding Chairman and we’ll miss him. Because we believe in separating the role of the Chair and CEO, I’ve decided to retire as CEO to assume Chairmanship at that time.

Frankly, now that we’ve completed our corporate restructuring to focus on the utility, it makes sense from a continuity perspective to turn the reigns over to John Russell, who’s been the President and Chief Operating Officer at Consumers Energy since 2004. John’s experience and leadership of the utility business makes him the ideal candidate to lead the company as we focus on our growing forward strategy.

I know many of you already met John at various events over the past few years and will agree with me that he brings a high level of dedication and energy to the company. John has already announced a few key changes to his senior management team that will take effect at the annual meeting or near that time as well. We’ve been planning those changes as part of the transition, so I’m confident that the change will be seamless and allow us to continue the progress we’ve made. Now let me turn the call over to John to discuss his priorities for 2010 in our key regulatory matters.

John Russell

For 2010, our major priorities haven’t changed. There are no changes in our financial objectives for earnings, cash flow and capital structure that were set out in early March. Tom will review each of them with you in a few minutes. Based on excellent operations, which is the foundation of our business strategy, and we will continue to focus on ways to improve our operational performance.

Our plan is to invest $7 billion in the utility over the next five years. That will result in a rate base growth of about 7%. We believe the regulatory structure and the Michigan energy law supports the fair and timely recovery of these investments. We will continue to take an active role to influence national energy policy being debated in Washington which serves the best interests of our customers and our shareholders.

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