CMS Energy Corporation

Good morning everyone and welcome to the CMS Energy second quarter 2021 results. The earnings news release issued earlier today and the presentation used in this webcast are available on CMS Energy's website in the investor relations section. This call is being recorded. After the presentation, we will conduct a question and answer session. Instructions will be provided at that time. If at any time during the conference you need to reach an operator, please press the star key followed by zero. Just a reminder, there will be a rebroadcast of this conference call today, beginning at 12 p.m. Eastern Time, running through August 5th. 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 Mr. Sri Vati Patti, Vice President of Treasury and Investor Relations. Please go ahead.

Thank you, Rocco. Good morning, everyone, and thank you for joining us today. With me are Garrick Rochelle, President and Chief Executive Officer, and Reggie Hayes, Executive Vice President and Chief Financial Officer. This presentation contains forward-looking statements which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to differ materially. This presentation also includes non-GAAP measures. Reconciliations of these measures for the most directly comparable GAAP measures are included in the appendix and posted on our website. Now I'll turn the call over to Garrick.

Thanks, Sri, and thank you, everyone, for joining us today. It's great to be with you, and we thank you for your continued interest and support. I'm going to start today with the end in mind. Strong quarter and a great first half of the year. giving us confidence as we target the high end of the guidance range. Reggie will walk through the details of the quarter, and I'll share what the strong results mean for 2021 earnings. Needless to say, I'm very pleased. An important June, sale of Interbank at three times book value, moving from non-core to the core business, with a strong focus on regulated utility growth. The sale of the bank provides for greater financial flexibility, eliminating planned equity issuance from 2022 to 2024. And, and, Reggie will share how we have reduced our equity issuance need for 2021 in today's remark. Furthermore, with the filing of our integrated resource plan, you can see the path for more than $1 billion into the utility. Again, without equity issuance. Not only is there visibility to that investment, but certainty in the timeline for review. I'm excited about this IRP. It's a remarkable plan. Many have set net zero goals. We have industry-leading net zero goals. And this IRP provides a path and is an important proof point in our commitment. we are leading the clean energy transformation. It starts with our investment thesis. This simple but intentional approach has stood the test of time and continues to be our approach going forward. It is grounded in a balanced commitment to all our stakeholders and enables us to continue to deliver on our financial objectives. With the sale of EnerBank, and the plan to exit coal by 2025. Our investment thesis gets even simpler, but now it's also cleaner and leaner. We continue to mature and strengthen our loon operating system, the CEUA, which delivers value by reducing cost and improving quality, ensuring affordability for our customers. And our thesis is further strengthened by Michigan's supportive regulatory construct. All of this supports our long-term adjusted EPS growth of 6% to 8%, and combined with our dividend provides a premium total shareholder return of 9% to 11%. All of this remains solidly grounded in our commitment to the triple bottom line of people, planet, and profit. As I mentioned, our integrated resource plan provides the proof points to our investment thesis. our net zero commitments, and highlights our commitment to the triple bottom line by accelerating our decarbonization efforts, making us one of the first utilities in the nation to exit coal. We're increasing our renewable build-out, adding about 3 gigawatts of solar by 2040, up 2 gigawatts from the previous plan. Furthermore, this plan ensures reliability, a critical attribute as we place more intermittent resources on the grid. The purchase of over two gigawatts of existing natural gas generation allows us to exit coal and dramatically reduces our carbon footprint. Existing natural gas generation is key. And like we've done historically with the purchases of our Zeeland and Jackson generating stations, this is a sweet spot for us where we reduce permitting, construction, and startup risk. It is also thoughtful in that it's not a 40 to 50 year commitment that you would get with a new asset, which we believe is important as we transition to net zero carbon. And, yes, another and, our plant is affordable for our customers. It will generate $650 million of savings essentially pain for our transition to clean energy. This is truly a remarkable plan. It is carefully considered and data-driven. We've analyzed hundreds of scenarios with different sensitivities, and our plan was thoughtfully developed with extensive stakeholder engagement. I couldn't be more proud of this plan. and especially the team that put it together. We've done our homework, and I'm confident it is the best plan for our customers, our coworkers, the great state of Michigan, and of course you, our investors. It hits the triple bottom line. The integrated resource plan is a key element of Michigan's strong regulatory construct, which is known across the industry as one of the best It is a result of legislation designed to ensure a timely recovery of the necessary investments to advance safe and reliable energy in our state. Michigan's forward-looking test years and the three-year pre-approval structure of the IRP process gives visibility on our future growth. It enables us and the Commission to align on long-term generation planning. and provide greater certainty as we invest in our clean energy transformation. We anticipate an initial order for the IRP from the Commission in April and a final order in June of next year. The visibility provided by Michigan's regulatory construct enables us to grow our capital plan to make the needed investments on our system. On slide six, you can see that our five-year capital plan has grown every year. Our current five-year plan, which we'll update on our year-end call, includes $13.2 billion of needed customer investment. It does not contain the upside in our IRP. The IRP provides a clear line of sight to the timing and composition of an incremental $1.3 billion of opportunity. And as I shared on the previous slide, the regulatory construct provides timely approval of future capital expenditures. I really like this path forward. And beyond our IRP, there is plenty of opportunity for our five-year capital plan to grow, given the customer investment opportunities we have in our 10-year plan. Our backlog of needed investments is as vast as our system, which serves nearly 7 million people in all 68 counties of Michigan's Lower Peninsula. We see industry-leading growth continuing well into the future. So where does that put us today? As I stated in my opening remarks, we had a strong quarter in the great first half of the year. The bank sale and now the IRP filing provide important context for our future growth and positioning of the business. Let me share my confidence. For 2021, we are focused on delivering adjusted earnings from continuing operations of $2.61 to $2.65 per share, and we expect to deliver toward the high end of that range. For 2022, we are reaffirming our adjusted four-year guidance of $2.85 to $2.87 per share. Given the strong performance we are seeing this year, the reduced financing needs next year. In continued investments in the utility, there is upward momentum as we move forward. Now many of you have asked about the dividend. We are reaffirming again, no change to the $1.74 dividend for 2021. As we move forward, we are committed to growing the dividend in line with earnings with a target payout ratio of about 60%. While we are not going to provide 2022 dividend guidance on this call, I want to be very clear. We are committed to growing the dividend in 2022. It's what you expect. It's why you own us. And it's a big part of our value. I'll offer this. Our target payout ratio does not need to be achieved immediately and will happen naturally as we grow our earnings. Finally, I want to touch on our long-term growth rate, which is 68%. This has not changed. It's driven by the capital investment needs of our system, our customers' affordability, and the need for a healthy balance sheet to fund those investments. Historically, we've grown at 7%. But as we redeploy the proceeds from the bank, we will deliver toward the high end through 2025. I'll also remind you that we tend to rebase higher off of actuals and have historically either met or exceeded our guidance. All in, a strong quarter. Positioned well for 2021 with upward momentum. And with Interbank and the IRP, it all comes together. Nicely positioned for the long term. With that, I'll turn the call over to Reggie to discuss the details of our quarterly and year-to-date earnings. Reggie?