Executive Summary

CMS Energy delivered Q3 2022 adjusted EPS of $0.56 (vs. $0.54 in Q3 2021) on operating revenue of $2.02B, while reported EPS was $0.56 (vs. $0.64 in Q3 2021, driven by discontinued ops last year) .
Management raised 2022 adjusted EPS guidance to $2.87–$2.89 from $2.85–$2.89 and introduced preliminary 2023 adjusted EPS guidance of $3.05–$3.11, reiterating 6–8% long-term growth with confidence toward the high end .
Macro tailwinds from the Inflation Reduction Act (IRA) materially improve project economics: management expects solar costs down ~15% and >$60M/yr customer savings vs. plan, with no material Alternative Minimum Tax impact this decade; this enhances utility-owned competitiveness and storage optionality .
Industrial/commercial load growth remains a multi-year catalyst: economic development wins (e.g., Gotion EV battery investment ~$2.4B, >2,000 jobs) and semiconductor expansions support demand, with YTD weather‑normalized total electric deliveries up 0.9% vs. 2021 .

What Went Well and What Went Wrong

What Went Well
- Raised FY22 adjusted EPS guidance and initiated FY23 prelim guidance at 6–8% growth toward the high end, underscoring execution confidence .
- IRA tailwinds: ~15% lower solar costs, >$60M/yr customer savings vs. plan, storage ITC flexibility, and no material AMT through decade; improves owned renewables competitiveness .
- Economic development momentum: “commitment by Gotion... to build a factory in our service territory,” bolstering customer base and Michigan growth (CEO) .
What Went Wrong
- Operating margin compressed YoY on higher operating expenses; operating income was $258M vs. $260M in Q3 2021 on $2.02B revenue vs. $1.73B, implying lower operating margin (derived) .
- Reported EPS declined to $0.56 from $0.64 due to prior-year discontinued operations benefit; adjusted EPS rose but reported comparisons are less favorable .
- Ongoing storm reliability scrutiny in Michigan; management flagged a commission audit timeline into 2023, though framed as collaborative (potentially elongates reliability capex cadence) .

Financial Results

Metric	Q3 2021	Q2 2022	Q3 2022
Operating Revenue ($USD Millions)	$1,725	$1,920	$2,024
Operating Income ($USD Millions)	$260	$239	$258
Net Income Available to Common ($USD Millions)	$186	$145	$163
Diluted EPS (Reported) ($USD)	$0.64	$0.50	$0.56
Adjusted EPS ($USD)	$0.54	$0.53	$0.56
Operating Margin (%)	15.1% (260/1,725)	12.5% (239/1,920)	12.7% (258/2,024)

Notes: Operating Margin is derived from operating income divided by operating revenue using cited figures.

Segment breakdown: Not disclosed in the press release; results represent consolidated CMS Energy (Consumers Energy is the primary business) .

KPIs (Weather-Normalized Electric Deliveries, YTD vs. prior year)

Metric	YTD Q2 2022 vs. YTD 2021	YTD Q3 2022 vs. YTD 2021
Residential	(0.6)%	(1.1)%
Commercial	3.1%	2.1%
Industrial	2.9% (ex-1 large low-margin)	2.7% (ex-1 large low-margin)
Total	1.5% (ex-ROA/other)	0.9% (ex-ROA/other)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY 2022	$2.85–$2.89	$2.87–$2.89	Raised low end
Adjusted EPS (Prelim)	FY 2023	—	$3.05–$3.11	Introduced
Long-term Adjusted EPS Growth	Multi-year	6–8%, confident high end	6–8%, confident high end	Maintained
Annual Dividend per Share (DPS)	2022	$1.84	$1.84	Maintained
5-Year Capital Plan	Multi-year	$14.3B	$14.3B (excludes IRP upside)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2022)	Current Period (Q3 2022)	Trend
IRA impacts (renewables/storage, AMT)	Discussed policy backdrop; plan included ~8 GW solar, 75 MW near-term storage; decarbonization milestones	Solar costs ~15% lower; >$60M/yr customer savings; storage ITC flexibility; no material AMT impact through decade	Positive tailwind strengthening
Economic development/load growth	Utility sales recovery; Michigan policy support; early indicators of demand	Gotion EV battery plant (~$2.4B, >2,000 jobs); Hemlock expansion; ~200 MW new/expanding load YTD	Accelerating growth drivers
Rate cases/regulatory	Gas rate case settlement approved; constructive MI environment	Constructive feedback on pending electric case; exploring settlement; timelines into Q1’23	Remains constructive
Covert acquisition/financing	Outlined financing plans; equity forwards to fund parent needs	Covert adds ~$0.03–$0.04 EPS; equity forwards add ~$0.01–$0.02; embedded in FY23 prelim guide	EPS accretion clarified
Reliability/storms	Ongoing investment needs; sensitivities outlined	Commission audit process expected through 2023; framed as collaborative path to resiliency	Heightened focus, collaborative stance
Palisades nuclear PPA	Not highlighted	Open to PPA only at competitive/market-based terms with FCM; no ownership or current PPA	Watch process/RFP outcomes

Management Commentary

“CMS had another strong quarter and continues to execute well on all fronts, positioning us solidly for the fourth quarter and 2023.” – Garrick Rochow, President & CEO .
“The extension of tax credits... lowers cost for our robust renewables backlog... These tax advantages reduce the cost of new solar roughly 15%, providing annual cost savings of $60 million versus our plan... we do not expect a material impact in the alternative minimum tax through the remainder of the decade.” – Prepared remarks .
“We secured over 80 agreements year-to-date, which translates to roughly 200 megawatts of new or expanding load... supported by competitive rates... and robust policy.” – Prepared remarks .

Q&A Highlights

Covert plant EPS and financing: FY23 adjusted EPS guide embeds ~$0.03–$0.04 from Covert and ~$0.01–$0.02 from equity forwards .
IRA and renewables/storage: Expect higher utility-owned share as owned projects become more competitive vs. PPAs; stand-alone storage ITC expands grid flexibility; near-term 75 MW storage in plan with longer-term ~550 MW optionality .
Storm reliability docket: Commission audit to proceed through 2023; management views it as collaborative and aligned on resiliency investments .
Palisades: Company open to a competitive, market-based PPA with FCM; no current PPA and does not own/operate the plant .
Regulatory cadence: Pursuing settlement on the pending electric rate case; potential new filing in early 2023 depending on outcomes .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2022 EPS and revenue was not available due to a temporary data access limit today; as a result, we cannot quantify beat/miss vs. consensus at this time (S&P Global data unavailable).

Key Takeaways for Investors

Guidance raised and FY23 prelim introduced: The increase to $2.87–$2.89 and the $3.05–$3.11 prelim guide signal execution strength and sustained 6–8% growth at the high end into 2023 .
IRA is a multi-year catalyst: ~15% lower solar costs, >$60M/yr customer savings vs. plan, and storage ITC flexibility support more utility-owned renewables and grid storage deployment without AMT headwinds through the decade .
Load growth momentum: Large-scale industrial investments (EV batteries, semiconductors) and >80 new/expanding agreements (~200 MW) underpin demand and rate base growth potential .
Earnings quality: Q3 adjusted EPS rose YoY ($0.56 vs. $0.54) despite lower operating margin on higher expenses; reported YoY EPS decline reflects discontinued ops tailwind last year rather than core performance erosion .
Regulatory environment remains supportive: Gas rate case settled; constructive posture on the electric rate case with potential settlement; MI structure supports timely recovery and authorized returns .
2023 EPS drivers: Covert accretion (+$0.03–$0.04) and equity forward timing (+$0.01–$0.02), plus rate relief from recent/ongoing cases, offset normalization of favorable 2022 weather assumptions .
Watch items: Reliability audit process (potentially influences capex pacing), outcomes of RFPs/PPAs (including any Palisades proposal), and the FY23 capital plan refresh on the Q4 call .

Citations

Q3 2022 8-K and Exhibit 99.1/99.2:
Q2 2022 8-K and Exhibits:
Q1 2022 8-K and Exhibits:
Q3 2022 Earnings Call Transcript:

CONSUMERS ENERGY CO (CMS-PB)·Q3 2022 Earnings Summary