• Adjusted Earnings Per Share (EPS): $3.34, towards the high end of guidance range.
• 2025 EPS Guidance: Raised to $3.54 to $3.60, representing 6% to 8% growth.
• Adjusted Net Income: $998 million for 2024.
• Utility Customer Investment Plan: $20 billion over five years, up $3 billion from prior plan.
• Rate Base Growth: 8.5% through 2029.
• Capital Investment: $3.3 billion in 2024.
• Dividend Payout Ratio: Targeting about 60% over time.
• NorthStar Clean Energy EPS Contribution: $0.18 to $0.22 for 2025.
• 2025 Financing Plan: $1.3 billion of new holdco long-term debt and up to $500 million of equity.
• Load Growth: 2% to 3% annual growth expected in the outer years of the plan.

• Warning! GuruFocus has detected 11 Warning Signs with CMS.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CMS Energy Corp (NYSE:CMS) reported strong financial performance in 2024, with adjusted earnings per share of $3.34, towards the high end of their guidance range.
• The company has a five-year $20 billion utility customer investment plan, which is up $3 billion from the prior plan, supporting 8.5% rate base growth through 2029.
• CMS Energy Corp (NYSE:CMS) is making significant progress in improving customer reliability, with 93% of customers having power restored within 24 hours in 2024, compared to 87% in 2023.
• The company has a robust renewable energy plan, aiming to achieve 60% renewables by 2035, with a diversified mix including 9 gigawatts of solar and 4 gigawatts of wind.
• CMS Energy Corp (NYSE:CMS) is experiencing significant economic development in Michigan, with a projected 2% to 3% annual load growth driven by data centers and manufacturing.

Negative Points

• CMS Energy Corp (NYSE:CMS) faced significant weather-related financial headwinds in 2024, with the warmest winter in the last 25 years impacting financial performance.
• The company anticipates a significant negative variance in 2025 due to the reversal of select countermeasures and expected capital costs associated with parent financings.
• CMS Energy Corp (NYSE:CMS) is planning for a maintenance outage at the Dearborn Industrial Generation (DIG) facility, which will impact earnings in 2025.
• The regulatory environment in Michigan has been a concern, with some market participants worried about recent orders, although CMS Energy Corp (NYSE:CMS) remains confident in constructive outcomes.
• CMS Energy Corp (NYSE:CMS) has a significant reliance on external financing, with plans for approximately $1.3 billion of new holdco long-term debt and up to $500 million of equity issuance in 2025.

Q & A Highlights

Q: With respect to the permitting, you have a lot going on the renewable front. How do you see the ability to execute in this environment, especially with wind in your outlook? A: Garrick Rochow, President and CEO, explained that the key to successful permitting is working closely with local communities and landowners. CMS Energy has a strong pipeline of projects, including wind and solar, and is confident in its ability to execute these projects. The company is not involved in offshore or federal land projects, which simplifies the permitting process.

Q: Can you speak about the 2% to 3% load growth and what factors contribute to this projection? A: Garrick Rochow, President and CEO, emphasized that the 2% to 3% load growth is based on contracted projects, not hypothetical ones. The growth is driven by data centers and manufacturing, supported by recent state legislation. The company has a high degree of confidence in this growth, which is reflected in their renewable energy plan and five-year strategy.

Q: How do you feel about the regulatory environment in Michigan, given recent concerns in the marketplace? A: Garrick Rochow, President and CEO, expressed confidence in the regulatory environment, noting that CMS Energy has consistently achieved constructive outcomes in rate cases. He acknowledged the complexities of the regulatory process but emphasized the company's ability to navigate it successfully and deliver predictable results.

Q: Regarding the DIG facility, how significant is the planned maintenance outage for EPS this year? A: Rejji Hayes, CFO, stated that the outage will result in a loss of a little more than 50% of DIG's contribution compared to prior years. However, this will be offset by contributions from existing and new renewable projects, ensuring minimal impact on overall earnings.

Q: Can you provide more details on the financing strategy, particularly in relation to the $3 billion CapEx increase and equity needs? A: Rejji Hayes, CFO, explained that the increase in CapEx implies an additional $120 million in equity needs, bringing the total to around $500 million over the next two to three years. The company plans to utilize tax credit transfers, which will ramp up over the five-year plan, reducing equity needs in the outer years.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.