CMS Energy Corp Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Julien Dumoulin Smith - Jefferies - Analyst : Let me kick it off here -- look, let me just kick it off on something a little bit more time here. Just with respect to the permitting, you guys have a lot going on the renewable front. I'd love to hear your thoughts about the ability to execute in this environment. You guys specifically have wind in REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 2:30PM, CMS.N - Q4 2024 CMS Energy Corp Earnings Call your outlook. I'm just curious to get your thoughts here, given some of the backdrop here on the ability to execute and especially given the permitting regime has been something of a conversation in recent times in your geography, then I'll pivot back to some of the financials.

Question: Julien Dumoulin Smith - Jefferies - Analyst : Awesome. Excellent. I know that a lot of folks are kind of curious to understand exactly how that gets implemented, if you will. But pivoting back to the finishes, I mean, obviously, very nicely done here. Thank you for the updates on the low growth front. Can you speak a little bit to what the legislation does and especially could do prospectively. You kind of alluded it in broader terms. Can you speak a little bit more specifically in terms of what the contribution is in the 2% to 3% and what the big moving factors could be, especially subsequent to legislation, which was fairly recent, right, in terms of the -- what's reflected in that 2% to 3%?

Question: Julien Dumoulin Smith - Jefferies - Analyst : Yeah. Apologies. I'm thinking about the sort of the data center avenue. And to what extent is that reflected in that 2% to 3%? And again, is it just a little bit too nascent given how recently some of the stuff materialize?

Question: Jeremy Tonet - JPMorgan Chase & Co - Analyst : Just wanted to dive in a little bit, if I could, with regards to, I guess, how you feel about the regulatory environment in Michigan. There's been some concern in the marketplace with recent orders and figured it would be good just to hear from you guys how you think about things at these days.

Question: Jeremy Tonet - JPMorgan Chase & Co - Analyst : Got it. Sausage. Understood. I just want to go -- if I could pivot to DIG for a second here. It seems like -- I think you mentioned outage. I'm just wondering how much of a headwind that is for EPS this year, if you could quantify that.

Question: Jeremy Tonet - JPMorgan Chase & Co - Analyst : Right. I guess I was just thinking, I mean, guidance might have been even higher if not for this turnaround, but I understood your points there.

Question: Michael Sullivan - Wolfe Research LLC - Analyst : I actually wanted to start with Rejji just on the financing side. So do you mind just maybe bridging us a little bit from the $3 billion CapEx increase to what you increase on the equity side? Because it -- it seems like maybe a little bit less than what we would have otherwise expected in terms of equity need. How much is maybe tied to tax credit transferability? Any additional color there would be helpful.

Question: Michael Sullivan - Wolfe Research LLC - Analyst : Okay. That's really helpful. And my second question, I'm going to stick with you here, Rejji. In terms of the liability management side, how do you think about if there's more to potentially do if necessary? And I know you didn't bake it into the plan, but if weather is mild again for the second or third year in a row, are there more levers to pull on that front? And then maybe if I could also tie in, like, again, where you were conservative without baking in any hybrid issuances, like is that available to you currently, you think and just wanted to be really conservative? Yeah, just trying to think about where you have some of the flex.

Question: Andrew Weisel - Scotiabank Global Banking and Markets - Analyst : You covered a lot of areas. Just one quick thing I wanted to clarify on the dividend. The pace of the increase has decelerated the past couple of years. Wanted to understand the payout ratio for 2025 should be right around your target at 61% based on the midpoint of guidance. You obviously tend to beat the guidance midpoint as we all know. So my question is, looking to '26 and beyond, how should we think about the dividend growth? I understand it's a board decision. Rejji, I think you made a comment about wanting to retain more earnings to finance growth. How should we think about the pace of dividend growth relative to earnings going forward starting next year?

Question: Andrew Weisel - Scotiabank Global Banking and Markets - Analyst : It is. I certainly don't disagree. I just wanted to make sure you're comfortable going into the 50s, and it sounds like you are.

Question: Nicholas Campanella - Barclays - Analyst : I just wanted to ask just a follow-up to Jeremy's question a little bit further on like NorthStar and the DIG opportunities. Just you've outlined some of the potential upside there. But to the extent that you have just better bilateral opportunities that come down the pipeline that are incremental to that. Is that still just a further extension of the 6% to 8%? Or was you kind of reevaluating at that time?

Question: Nicholas Campanella - Barclays - Analyst : No, that's helpful. And then I guess my only follow-up is on the REP, like I know it's early, but just is this something that you expect to take the full distance? Or is there a settlement potential opportunity in there, too?

Question: Durgesh Chopra - Evercore ISI - Analyst : All my other questions have been answered. Just one big picture question on tariffs. They -- if China tariffs are in effect now, as you know, when they stay on for a prolonged period of time, just thinking about how it impacts you, especially given you have a considerable amount of renewable investment in the plan. So maybe talk to your supply chain, how you're derisking that? Just any color you could share there would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 2:30PM, CMS.N - Q4 2024 CMS Energy Corp Earnings Call

Question: Durgesh Chopra - Evercore ISI - Analyst : Well, that's really comprehensive. Appreciate all the detail. So I actually just wanted a follow-up question, and I was just curious about, is there a way to think about your equipment and your supply chain, how much of that is domestic versus international? Because my thought process is this is just not China, Canada, right? This is -- this might be -- the European Union might be next year. So just how to think about domestically versus internationally sourcing equipment and other things? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 2:30PM, CMS.N - Q4 2024 CMS Energy Corp Earnings Call

Question: David Arcaro - Morgan Stanley - Analyst : I was curious on maybe the broader kind of mission backdrop for supporting data centers. And I was curious, is there excess transmission capacity as you see it in Michigan or in your own fleet of -- on the generation side, you have extra like buffer to absorb data center projects in some of this load that you're seeing?

Question: David Arcaro - Morgan Stanley - Analyst : Got it. That's helpful. And then maybe a quick question just going back to the rate case. I know it's late in the process, but are there opportunities to settle broadly your individual pieces before the finish line?

Question: Travis Miller - Morningstar Inc. - Analyst : The quick clarification on the long-term opportunities. When you put the numbers $10 billion on the reliability road map, $10 billion on the vector -- REP rather, are those opportunities that are simply outside the plan, i.e., you're 6 through 10? Or are those opportunities that might come into the five-year plan?

Question: Travis Miller - Morningstar Inc. - Analyst : Okay. Great. And then the 2% to 3% electric growth, if you end up realizing that type of growth, is there a chance that you could get off of that kind of one-year rate case cadence, maybe extend it to two years? Is that the possibility as you run the numbers if you get that electric demand growth up?