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CE

CONSUMERS ENERGY CO (CMS-PB)·Q2 2021 Earnings Summary

Executive Summary

  • Q2 2021 delivered year-over-year EPS growth and solid operations: reported diluted EPS $0.61 vs $0.48 in Q2 2020 and adjusted continuing ops EPS $0.55 vs $0.46, supported by higher operating revenue and rate increases .
  • Management reaffirmed full‑year guidance and highlighted confidence “toward the high end” of the 2021 range, while shifting to continuing operations guidance ($2.61–$2.65) given EnerBank’s discontinued classification; 2022 adjusted EPS guidance $2.85–$2.87 and long‑term 6–8% EPS growth reaffirmed .
  • Strategic catalysts advanced: Consumers filed its 2021 IRP, proposing coal exit by 2025 and >$1Bn incremental rate base, and signed agreements to acquire ~2.2GW of Michigan gas generation (Covert in 2023; DIG/Gaylord/Comstock in 2025) .
  • Balance sheet/liquidity remained strong with $1.8Bn net liquidity and planned 2021 financings on track, enhancing flexibility to fund clean energy and reliability investments .

What Went Well and What Went Wrong

  • What Went Well

    • Rate and volume tailwinds drove operating revenue up to $1.558B and operating income to $252MM; electric segment benefited from favorable weather/sales mix and rate increases; gas earned lower taxes via accelerated benefits .
    • CEO emphasized clean energy transformation and confidence in hitting the high end of 2021 guidance: “we are well positioned to fund and implement key initiatives…while also expecting to be toward the high end of our 2021 guidance range” .
    • IRP execution and generation portfolio moves (coal exit by 2025; gas acquisitions) provide reliability and affordability with >$650MM customer savings and ~60% carbon reduction by 2025 per plan materials .

  • What Went Wrong

    • Gas deliveries declined (45 bcf vs 47 bcf), and electric forestry and distribution expenses increased, partially offsetting revenue gains .
    • Property taxes rose with capital spending; electric depreciation also increased as plant in service grew .
    • Regulatory overhangs persist (e.g., prior disallowance tied to Ray Compressor incident and capital cost recovery scrutiny), though not specific to Q2 results, they remain watch items as noted in risk/regulatory sections .

Financial Results

MetricQ2 2020Q1 2021Q2 2021
Operating Revenue ($MM)$1,382 $2,083 $1,558
Operating Income ($MM)$248 $485 $252
Net Income to Common ($MM)$136 $349 $176
Diluted EPS (Total, GAAP)$0.48 $1.21 $0.61
Diluted EPS (Continuing Ops)$0.45 $1.64 (YTD) $0.55
Adjusted EPS (Continuing Ops)$0.46 $1.64 (YTD) $0.55

Segment EPS contribution (per share):

Segment EPS (per share)Q2 2020Q2 2021
Electric Utility$0.43 $0.53
Gas Utility$0.14 $0.13
Enterprises$0.00 $0.01
Corporate Interest & Other($0.11) ($0.12)
Discontinued Ops (EnerBank)$0.03 $0.06
Adjusted Total$0.49 $0.62
Adjusted Continuing Ops$0.46 $0.55

Operational KPIs:

KPIQ2 2020Q2 2021
Electric Deliveries (GWh to end-use)8,000 8,700
Gas Deliveries (bcf)47 45
Net Cash Provided by Operating Activities ($MM, YTD)$796 $1,367

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS (Total)FY 2021$2.83–$2.87 (raised at FY20; reaffirmed Q1) ——
Adjusted EPS (Continuing Ops)FY 2021—$2.61–$2.65 (shift to continuing ops basis) Maintained; basis shifted
Adjusted EPSFY 2022$2.85–$2.87 $2.85–$2.87 Maintained
Long-Term EPS GrowthMulti-year6–8% 6–8% Maintained
DividendFY 2021$1.74 annual; 43.5¢ Q1 paid $1.74 annual (no change disclosed Q2) Maintained

Note: Q2 guidance presentation shifted to continuing operations, excluding EnerBank due to pending sale and discontinued operations treatment .

Earnings Call Themes & Trends

Transcript was not available in the document catalog for Q2 2021. The company furnished an earnings presentation; themes below reflect prepared materials and filings.

TopicPrevious Mentions (Q4 2020, Q1 2021)Current Period (Q2 2021)Trend
Clean energy / IRPRaised 2021 EPS guidance; emphasized net-zero carbon by 2040; outlined $13.2B 5-year plan and coal exit trajectory 2021 IRP filed; retire all coal by 2025; add ~8GW solar by 2040; >$1Bn incremental rate base; customer savings ~$650MM Accelerating decarbonization and capacity additions
Generation portfolio shiftsPlanning coal retirements; clean generation investments; DR/EE incentivesAgreements to acquire Covert (1,176MW) in 2023 and DIG/peakers (1,001MW) in 2025 to bridge reliability Executing bridge strategy to ensure reliability
Regulatory / rate recoveryConstructive MI regime; recent case outcomes support investments; incentives reaffirmed Ongoing visibility; continued recovery of investments; expense pressures noted (forestry/distribution) Stable but watch O&M and tax recovery
ESG / stakeholderStrong ESG narrative; net zero methane by 2030; top-tier safety/DEI recognition Continued focus; IRP supports emissions cuts; customer affordability emphasized Reinforced ESG execution
Financing/liquidity2021 financings plan; target mid-teens FFO/debt; net liquidity >$1.6B (YE20)2021 plan on track; net liquidity ~$1.8Bn as of 6/30; preferred issuance in July Strong flexibility maintained
Discontinued ops / EnerBank2020: EnerBank contributions; guidance raised Pending sale to Regions; continued discontinued ops EPS; guidance basis change De-risking non-core bank asset

Management Commentary

  • “CMS Energy is in a solid position to deliver on our commitments…With our recent Integrated Resource Plan filing and pending sale of EnerBank, we are well positioned to fund and implement key initiatives related to our clean energy transformation while also expecting to be toward the high end of our 2021 guidance range.” — Garrick Rochow, President & CEO .
  • “We will continue to invest in Michigan and in our communities while leading the clean energy transformation with support from our 5-year, $13.2 billion customer investment plan…” — Garrick Rochow (Q1 remarks) .
  • “CMS Energy has delivered consistent industry‑leading financial results for nearly two decades…we are well positioned for success in 2021.” — Garrick Rochow (FY20) .

Q&A Highlights

An earnings call transcript for Q2 2021 was not available in the catalog; the company furnished an investor presentation. No Q&A remarks could be reviewed .

Estimates Context

Wall Street consensus EPS and revenue estimates for Q2 2021 could not be retrieved due to data access limits; therefore, we cannot provide comparisons to consensus at this time. Values would normally be sourced from S&P Global; however, consensus was unavailable for inclusion in this recap [GetEstimates error; Values retrieved from S&P Global unavailable].

Key Takeaways for Investors

  • Core utility execution driving steady EPS: Q2 diluted EPS $0.61 (GAAP) and adjusted continuing ops EPS $0.55; revenue up year-over-year to $1.558B, supported by rate increases and favorable electric demand .
  • Guidance intact with high-end bias: FY2021 continuing ops EPS $2.61–$2.65 (basis changed due to EnerBank), FY2022 $2.85–$2.87, long-term 6–8% CAGR reaffirmed; expect stability into 2H .
  • Strategic portfolio and IRP actions are tangible catalysts: coal exit by 2025, >$1Bn rate base uplift, and gas plant acquisitions to ensure capacity, reliability, and affordability .
  • Liquidity and financing position strong: ~$1.8Bn net liquidity as of 6/30 and preferred issuance in July underpins capital plan for clean energy and grid modernization .
  • Watch cost pressures and regulatory items: higher forestry/distribution/property taxes and rising depreciation with capital spending; maintain focus on cost management and timely recovery .
  • EnerBank sale simplifies profile; continuing ops guidance focus improves utility clarity; monitor closing timeline and use of proceeds toward core investments .

Appendix: Additional Data Tables

Revenue and EPS trajectory (oldest to newest):

MetricQ2 2020Q1 2021Q2 2021
Operating Revenue ($MM)$1,382 $2,083 $1,558
Diluted EPS (GAAP)$0.48 $1.21 $0.61
Adjusted EPS (Continuing Ops)$0.46 $1.64 (YTD) $0.55

Cash flow (YTD through Q2):

MetricYTD Q2 2020YTD Q2 2021
Net Cash Provided by Operating Activities ($MM)$796 $1,367

Electric and Gas deliveries:

MetricQ2 2020Q2 2021
Electric Deliveries (GWh)8,000 8,700
Gas Deliveries (bcf)47 45