Yahoo Finance DTE Energy Co (DTE) (Q1 2024) Earnings Call Transcript Highlights: Strategic Investments and ...
Operating Earnings: $346 million for Q1 2024.
Earnings Per Share (EPS): $1.67 for Q1 2024.
Annual Dividend: $4.08 per share, aligned with EPS growth.
Long-term EPS Growth Rate: Targeting 6% to 8%.
Capital Investment: $25 billion over the next 5 years, with 95% in utilities.
Electric Rate Case Filing: Outlines investments for a more resilient and cleaner grid.
Coal Usage: Plans to cease at Belle River by 2026 and Monroe by 2032.
Battery Energy Storage: 220-megawatt project, operational by 2026, costing $0.5 billion.
Reliability Improvement: Reducing power outages by 30% and outage times by 50% over 5 years.
Financial Position: Strong balance sheet with minimal equity issuances planned ($0 to $100 million annually through 2026).
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: How are you thinking about the cadence of CapEx updates in light of the new legislation? Could we see adjustments to generation plant CapEx in the near term to align closer to the new construct? A: Gerardo Norcia, CEO & Chairman of DTE Energy, explained that the capital plan was updated to reflect the IRP settlement and recent legislation, which resulted in a $2 billion increase. He anticipates further incremental investment opportunities as they approach the latter part of the plan and roll it into the next 5-year period.
Q: Regarding the funding of incremental CapEx, how should we think about the incremental equity on every dollar that could increase? Should we assume a 50:50 cap structure? A: David S. Ruud, Executive VP & CFO, stated that DTE's strong cash flow and balance sheet allow for capital investment with minimal equity, fitting within the 0 to $100 million range through 2026. This is supported by cash from the IRA and tax credits, maintaining the FFO to debt at 15% to 16%.
Q: Can you discuss your approach to potential settlements in the electric rate case? A: Gerardo Norcia mentioned that while DTE aims to settle, they are prepared for a full course of litigation if necessary. He expressed confidence in receiving a supportive outcome from the commission, noting the administration's support for the investments outlined in the rate case.
Q: What are the prospects for the storm cost tracker in the rate case, and how might it impact future rate cases? A: Joi M. Harris, President & COO, indicated that the $65 million storm tracker could have been beneficial last year and that there is a good chance it will receive support. She noted alignment with other utilities on pursuing this type of tracker.
Q: With the significant investment plan over the next few years, what are the factors that could help offset customer bill increases? A: Gerardo Norcia highlighted that many of DTE's investments are aimed at reducing operating costs, which should help moderate customer bills. He also mentioned the potential for increased revenue from new industrial loads like data centers and the growth in electric vehicles.
Q: How do you see the potential for data centers impacting DTE's operations and customer bills? A: Gerardo Norcia expressed that Michigan's favorable conditions and DTE's capabilities make it an attractive location for data centers. He anticipates that legislation exempting sales and use tax for data centers could be a significant catalyst for attracting these investments to Michigan.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
