CMS Energy CEO Discusses Q1 2012 Results - Earnings Call Transcript

CMS Energy (CMS)

Q1 2012 Earnings Call

April 26, 2012 9:00 a.m. ET

Executives

Laura Mountcastle - VP and Treasurer

John Russell - President and CEO

Tom Webb - EVP and CFO

Analysts

Kevin Cole - Credit Suisse

Paul Ridzon - KeyBanc

Paul Patterson - Glenrock Associates

Mark Barnett - Morningstar Research

Ali Agha - SunTrust

Brian Russo - Ladenburg Thalmann

Steve Fleishman - Bank of America

Jonathan Arnold - Deutsche Bank

Andy Levi - Avon Capital

Presentation

Operator

Good morning, everyone, and welcome to the CMS Energy 2012 First Quarter Results and Outlook Call. This call is being recorded. Just a reminder, there will be a rebroadcast of this conference call today, beginning at noon Eastern time running through May 3. 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. Please go ahead.

Laura Mountcastle

Thank you. Good morning and thank you for joining us today. With me are John Russell, President and Chief Executive Officer, and Tom Webb, Executive Vice President and Chief Financial Officer.

Our earnings press release issued earlier today and the presentation used in this webcast are available on our website.

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.

CMS Energy provides financial results on both a recorded GAAP and adjusted non-GAAP basis. Management views adjusted earnings as a key measure of the company's present operating financial performance unaffected by discontinued operations, asset sales, impairments, regulatory items from prior years, or other items. Certain of these items have a potential to impact favorably or unfavorably the company's reported earnings in 2012.

The company is not able to estimate the impact of these matters and is not provided reported earnings guidance.

Now, I’ll turn the call over to John.

John Russell

Thanks, Laura. And good morning, everyone. Thanks for joining us today on our first quarter earnings call. I'd like to being by first congratulating Laura Mountcastle on her upcoming retirement, which was announced yesterday. Laura will be leaving us effective July 1, having served as a key financial officer of our company for 18 years.

Laura has held the role most familiar to those of you on the phone as Vice President of Investor Relations and Treasurer since 1999. I know you will join me in wishing Laura the best and Laura, I'll tell you, I've always enjoyed working with you and I want to publically thank you for your great years of service to the company and on behalf of everyone of the company, we'll miss you.

Laura Mountcastle

Thank you, John.

John Russell

Good luck. Let me begin the presentation today with a few brief comments about the quarter before I turn the call over to Tom to discuss the financial results and outlook for the remainder of the year. Then we'll close with Q&A.

First quarter adjusted earnings per share was $0.37, down $0.14 from 2011. The results were impacted by the warmest winter on record in Michigan, reducing earnings by $0.13 this year and $0.18 compared to the colder than normal weather a year ago.

The good news is, we've identified a number of actions some of which have already been implemented to offset the adverse weather. Tom will discuss several of these with you later. As a result, we are reaffirming our full year adjusted EPS guidance of $1.52 to $1.55 a share.

On the regulatory side, our electric and gas rate cases are proceeding on schedule. I'll give you an update on these two in a minute. In early April, the Michigan Court of Appeals ruled in a DTE case that the Michigan Public Service Commission lacks statutory authority to adopt a revenue decoupling mechanism for electric utilities. As the result of this decision, we wrote off a $59 million regulatory asset covering the period from December 2009 through November of 2011.

The Court's ruling does not affect our 2012 adjusted earnings guidance since the electric decoupling mechanism was only authorized through November of last year. And I also am going to talk about the bill to raise the retail open assess cap in Michigan and give you an overview on the operations for the quarter.

Many of you are familiar with our rate case timeline. We are nearing the deadline for the Commission to issue a final order in our electric rate case. All of the testimony and briefs are filed and the staff in ALG have filed their recommendations. The final order is due no later than June 8.

The gas rate case is scheduled for a final order by August 31. Because of the limited size of the case, there's a chance we could settle this case. In March, a bill was introduced to raise the retail open access cap. We are opposed to this bill, which would benefit a relatively small number of business customers at the cost of all other customers. There is wide spread opposition against the bill including the Chair of the Senate Energy and Technology Committee and the Chair of the House Energy and Technology Committee.

Read the rest of this transcript for free on seekingalpha.com

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