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CMS ENERGY CORP (CMS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 diluted EPS was $0.87; FY 2024 reported EPS was $3.33 and adjusted EPS was $3.34, toward the high end of guidance .
  • 2025 adjusted EPS guidance was raised to $3.54–$3.60 from $3.52–$3.58; dividend increased to $2.17 annually (54.25¢ quarterly), marking the 19th consecutive annual increase .
  • Management flagged significant weather headwinds (warmest winter in 25 years) offset by constructive rate outcomes, cost savings (“CE Way”), and a strong NorthStar Clean Energy contribution .
  • Strategic catalysts: reliability gains (93% restored within 24 hours vs 87% in 2023), ~360 MW of incremental contracted load, and an expanded $20B 2025–2029 utility investment plan underpinning 6–8% LT EPS growth with confidence toward the high end .

What Went Well and What Went Wrong

What Went Well

  • Reliability improvements: “restoring power to over 93% of customers in less than 24 hours – compared to 87% in 2023” as part of the Reliability Roadmap .
  • Guidance and dividend momentum: raised 2025 adj. EPS to $3.54–$3.60 and increased the quarterly dividend to 54.25¢ ($2.17 annualized) .
  • Strong execution despite weather: “adjusted net income of $998 million ($3.34 per share)… key drivers included constructive regulatory outcomes, a solid beat at NorthStar, cost performance fueled by the CE Way” .

What Went Wrong

  • Weather headwinds: “warmest winter in the last twenty-five years” drove significant negative variance in 2024, especially Q1 and Q4 .
  • Dig planned outage in 2025: NorthStar’s DIG outage reduces contribution temporarily, partially offset by other operating assets and renewables coming online .
  • Operating expense mix: increased vegetation management and reliability O&M expected in 2025, albeit offset by CE Way productivity savings .

Financial Results

Consolidated P&L (Quarterly comparison — oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
Operating Revenue ($MM)$1,950 $1,743 $1,989
Operating Income ($MM)$406 $367 $425
Income Before Income Taxes ($MM)$317 $273 $306
Net Income Available to Common ($MM)$306 $251 $262
Diluted EPS ($)$1.05 $0.84 $0.87
Adjusted EPS ($)$1.05 $0.84 $0.87

Notes: Adjusted EPS per quarter as presented in company materials; reconciliation schedules provided in 8-K exhibits .

Consolidated (Annual comparison)

MetricFY 2023FY 2024
Operating Revenue ($MM)$7,462 $7,515
Operating Income ($MM)$1,235 $1,487
Net Income Available to Common ($MM)$877 $993
Reported Diluted EPS ($)$3.01 $3.33
Adjusted Diluted EPS ($)$3.11 $3.34

Segment EPS (Adjusted, per share)

SegmentFY 2023FY 2024Q4 2023Q4 2024
Electric Utility$1.95 $2.29 $0.50 $0.47
Gas Utility$1.12 $1.10 $0.46 $0.44
NorthStar Clean Energy$0.23 $0.21 $0.14 $0.03
Corporate Interest & Other($0.19) ($0.26) ($0.05) ($0.07)
Consolidated Adjusted EPS$3.11 $3.34 $1.05 $0.87

KPIs and Cash Flow

KPIFY 2023FY 2024
Customers Restored <24 hrs (%)87% 93%
Incremental Contracted Load (MW, 2024 highlights)—>360 MW
Net Cash from Operating Activities ($MM)$2,309 $2,370
Utility Capital Investment ($B)—$3.3 (2024 actual)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS (Consolidated)FY 2025$3.52–$3.58 $3.54–$3.60 Raised
Dividend per Share (Annual)2025$2.06 (prior annual DPS) $2.17 ($0.5425 quarterly) Raised
Segment EPS — UtilityFY 2025—$4.01–$4.05 New detail
Segment EPS — NorthStarFY 2025—$0.18–$0.22 New detail
Segment EPS — ParentFY 2025—(0.65)–(0.67) New detail
Utility Capital Plan2025–2029$17B (prior plan) $20B (up $3B) Raised
Electric Sales GrowthFY 2025—~1% (weather-normalized), 2–3% longer term New detail
Planned Equity IssuanceFY 2025Up to $350MM (prior profile) Up to $500MM; long-term avg ~$450MM/yr Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Regulatory environment (Michigan)Strong framework; gas case settled; electric order constructive Supportive energy law; revised electric case position “Constructive outcomes” expected; staff position supportive; confidence in order by March Stable/Constructive
Reliability roadmap investmentsEmphasis on trimming, undergrounding, automation +$3B to $7B over 5 yrs for distribution reliability 93% restored <24 hrs; continued O&M focus on vegetation Improving
Load growth/data centersSigned 230 MW by 2026; cautious disclosures 1,350 MW cumulative since 2015 2–3% LT load; ~65% pipeline data centers; nine GW pipeline; contracted projects staged 2025–2029 Accelerating
NorthStar/DIGTightening markets; bilateral contract upside Outperformance YTD; operational efficiency 2025 DIG outage headwind; 2026–2029 step-up potential Near-term headwind, mid-term tailwind
Financing & equityOpportunistic debt/hybrids; no 2024 equity 2024 financings completed; ~$2.2B liquidity 2025: ~$1.1B utility debt, ~$1.3B HoldCo debt, up to $500MM equity; hybrids optional Elevated funding to support plan
Tariffs/supply chain——Limited direct exposure; diversified sourcing; risk-sharing with vendors Managed risk

Management Commentary

  • CEO: “We delivered adjusted earnings per share of $3.34 toward the high end… we are raising our 2025 guidance… which represents 6% to 8% growth and we continue to guide toward the high end” .
  • CEO on reliability and renewables: “In 2024, we restored power to over 93% of customers within twenty four hours… filed our twenty year renewable energy plan… nine gigawatts of solar and four gigawatts of wind” .
  • CFO: “Key drivers… included constructive regulatory outcomes, a solid beat at NorthStar, cost performance fueled by the CE Way… weather related financial headwinds” .
  • CFO on 2025 glide path: “$0.39 per share of positive variance [normal weather]… $0.21… rate relief… $0.03… productivity… offset by $0.37–$0.43 negative variance [financing, taxes, other]” .

Q&A Highlights

  • Permitting/execution: CMS focuses on private land development and local engagement; wind/solar pipeline proceeding with recent completions and new 360 MW solar projects .
  • Data center legislation/load: 2–3% LT load growth embedded is contracted and staged through 2029; pipeline now ~65% data centers; sales/use tax passage supportive .
  • Regulatory cadence: Expect constructive electric case order; openness to settlement but timing suggests final order; annual case cadence preferred for smaller, frequent adjustments .
  • DIG outage: 2025 outage reduces NorthStar’s contribution (~>50% of prior DIG contribution), offset by other assets and new renewables; upside expected in 2026–2029 .
  • Financing strategy: 2025 plan includes ~$1.1B utility debt, ~$1.3B HoldCo debt, up to $500MM equity; hybrids remain optional depending on market conditions .
  • Tariffs/supply chain: Minimal direct China sourcing; diversified domestic and SE Asia supply; contract risk transfer with vendors; ~10–12% indirect exposure across Canada/Mexico/China, mitigated by stock and vendor shifts .

Estimates Context

  • Wall Street consensus estimates from S&P Global were unavailable at the time of research due to provider limits; therefore, we cannot present Q4 2024 revenue/EPS vs consensus or FY comparisons. Values retrieved from S&P Global were not accessible in this session.

Key Takeaways for Investors

  • CMS delivered FY 2024 adjusted EPS at the high end and raised FY 2025 guidance, signaling continued confidence and visibility despite weather headwinds .
  • Reliability metrics improved materially; sustained O&M and capital prioritization (vegetation, undergrounding, automation) should support service quality and regulatory outcomes .
  • Contracted load growth and a growing data center pipeline underpin the expanded $20B 2025–2029 investment plan and longer-term 2–3% electric sales growth narrative .
  • Near-term watch item: 2025 DIG outage impact on NorthStar; medium-term tailwinds as capacity prices tighten and recontracting opportunities materialize (2026–2029) .
  • Funding plan is proactive (utility and HoldCo debt, equity up to $500MM, potential hybrids); monitor execution cadence and cost of capital to gauge EPS accretion vs dilution .
  • Regulatory backdrop remains constructive; focus on timely electric case resolution by March and REP outcome later in 2025 as catalysts .
  • Trading implication: Guidance raise and reliability momentum are supportive; headline sensitivity remains around weather normalization (positive) and rate case outcomes (near-term catalyst), while financing mix and DIG outage create tactical volatility .

Sources

  • Q4 2024 8‑K 2.02 and exhibits (press release, financials, presentation) .
  • Q4 2024 earnings call transcript .
  • Q3 2024 8‑K 2.02 press release and presentation .
  • Additional Q4 press releases: dividend increase ; year‑end PRNewswire release .