Annual Report
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Table of Contents CMS ENERGY & C ONSUME RS ENERGY ANNUAL REPORT 2019 Table of Contents Dear Shareowners: I’m proud to report that we delivered another year of strong financial performance in 2019, marking 17 years of meeting our adjusted earnings guidance. As we reflect on a successful year of world class performance delivering hometown service, I’m proud to share our top achievements with you, as measured by our triple bottom line of People, Planet and Profit. PEOPLE ─ Serving our customers, communities and co-workers. Highlights include: • Achieved 1st Quartile Employee Engagement • Named the #1 Michigan Company for Diversity 2019 by Forbes® Magazine for the third year in a row • Ranked 2nd in the state (40th of 113 companies globally) in the Military Times Best for Vets: Employers 2019 • Ranked in the Top 50 Best Employers for Diversity 2020 by Forbes® Magazine • Won the Association for Talent Development (ATD) 2019 BEST Award (# 3 in the world) • Received the 2019 Women’s Resource Network’s Pillar Award • Ranked #1 overall in the Midwest Large Segment for the 2019 Gas Residential Customer Satisfaction Study, JD Power & Associates • Partnered with Project Search and Jackson Intermediate School District to launch our 2nd cohort of interns to provide meaningful work experiences to young adults with disabilities PLANET ─ Going above and beyond environmental regulations to leave our planet better than we found it. Highlights include: • Settled our 20-year Clean Energy Plan with broad coalition of support • Cross Winds® Energy Park Phase III (76 MW) became operational • Launched programs PowerMIDrive and Bring Your Own Thermostat • Made good progress toward our five-year goals that we set in 2017: o Goal ─ save 1 billion gallons of water: through 2019 we’ve saved over 400 million gallons of water o Goal ─ reduce waste to landfill by 35%: through 2019 we’ve reduced our landfill waste by 10% o Goal ─ protect, enhance or restore over 5,000 acres of land: through 2019 we’ve restored over 2,200 acres of land PROFIT ─ Delivering consistent, industry-leading financial performance. Highlights include: • Reported net income of $702 million, or $2.33 per share, compared with $657 million, or $2.32 per share, the previous year • Adjusted net income of $708 million, or $2.49 per share ─ achieving annual adjusted earnings per share growth of 7%, again • In January 2020, increased our common stock dividend by 6.5% to $1.63 per share on an annualized basis ─ the 14th common stock dividend increase in as many years • Delivered operating cash flow of $1.8 billion • Achieved all-time high stock price of $65.04 and market cap of $18.5 billion (9/26/2019) • Won EEI's 5-year Total Shareholder Return (TSR) Award for Mid-Cap Utilities with a 5-year TSR of 150% • Ranked Top 3 by Institutional Investor in all major categories: CEO, CFO, IR Professional and IR Team • Won IR Magazine's Best IR by a Senior Management Team i Table of Contents I am proud of our co-workers who exemplify our purpose ─ CMS Energy: World Class Performance Delivering Hometown Service. This will continue to guide us on a path of success. I look forward to the coming year, and I thank you for your continued support. Sincerely, Patti Poppe President and CEO March 19, 2020 This letter includes non-GAAP measures. Reconciliations to the most directly comparable GAAP measures are found immediately following this letter and on our website at cmsenergy.com. ii Table of Contents CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited) In Millions, Except Per Share Amounts Twelve Months Ended 2019 12/31/19 12/31/18 Increase Net Income Available to Common Stockholders $ 680 $ 657 4% Reconciling items: Other exclusions from adjusted earnings 37 9 Tax impact (9) (*) Gain on assets previously sold (*) (4) Tax impact * 1 Tax reform - (4) Adjusted net income – non-GAAP $ 708 $ 659 7% Average Common Shares Outstanding Basic 283.0 282.2 Diluted 284.3 282.9 Basic Earnings Per Average Common Share Reported net income per share $ 2.40 $ 2.33 3% Reconciling items: Other exclusions from adjusted earnings 0.13 0.03 Tax impact (0.03) (*) Gain on assets previously sold (*) (0.01) Tax impact * * Tax reform - (0.02) Adjusted net income per share – non-GAAP $ 2.50 $ 2.33 7% Diluted Earnings Per Average Common Share Reported net income per share $ 2.39 $ 2.32 3% Reconciling items: Other exclusions from adjusted earnings 0.13 0.03 Tax impact (0.03) (*) Gain on assets previously sold (*) (0.01) Tax impact * * Tax reform - (0.01) Adjusted net income per share – non-GAAP $ 2.49 $ 2.33 7% * Less than $0.5 million or $0.01 per share. Management views adjusted (non-Generally Accepted Accounting Principles) earnings as a key measure of the Company's present operating financial performance and uses adjusted earnings for external communications with analysts and investors. Internally, the Company uses adjusted earnings to measure and assess performance. Adjustments could include items such as discontinued operations, asset sales, impairments, restructuring costs, regulatory items from prior years, or other items detailed in these summary financial statements. Adjusted earnings should be considered supplemental information to assist in understanding our business results, rather than as a substitute for reported earnings. iii Table of Contents (This page intentionally left blank) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to_____ Commission File Registrant; State of Incorporation; IRS Employer Number Address; and Telephone Number Identification No. 1-9513 CMS ENERGY CORPORATION 38-2726431 (A Michigan Corporation) One Energy Plaza, Jackson, Michigan 49201 (517) 788 0550 1-5611 CONSUMERS ENERGY COMPANY 38-0442310 (A Michigan Corporation) One Energy Plaza, Jackson, Michigan 49201 (517) 788 0550 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered CMS Energy Corporation Common Stock, $0.01 par value CMS New York Stock Exchange CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078 CMSA New York Stock Exchange CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078 CMSC New York Stock Exchange CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079 CMSD New York Stock Exchange Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 Series CMS-PB New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. CMS Energy Corporation: Yes No Consumers Energy Company: Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. CMS Energy Corporation: Yes No Consumers Energy Company: Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. CMS Energy Corporation: Yes No Consumers Energy Company: Yes No (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). CMS Energy Corporation: Yes No Consumers Energy Company: Yes No Exchange Act. CMS Energy Corporation: Consumers Energy Company: Large accelerated filer Large accelerated filer Accelerated filer Accelerated filer Smaller reporting company Smaller reporting company Emerging growth company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. CMS Energy Corporation: Consumers Energy Company: CMS Energy Corporation: Yes No Consumers Energy Company: Yes No The aggregate market value of CMS Energy voting and non voting common equity held by non affiliates was $16.352 billion for the 282,365,464 CMS Energy Corporation Common Stock shares outstanding on June 30, 2019 based on the closing sale price of $57.91 for CMS Energy Corporation Common Stock, as reported by the New York Stock Exchange on such date. There were no shares of Consumers common equity held by non affiliates as of June 30, 2019. There were 283,882,207 shares of CMS Energy Corporation Common Stock outstanding on January 10, 2020, including 12,322 shares owned by Consumers. On January 10, 2020, CMS Energy held all 84,108,789 outstanding shares of common stock of Consumers. Documents incorporated by reference in Part III: CMS Energy’s and Consumers’ proxy statement relating to their 2020 Annual Meetings of Shareholders to be held May 1, 2020. Table of Contents Table of Contents CMS Energy Corporation Consumers Energy Company Annual Reports on Form 10-K to the Securities and Exchange Commission for the Year Ended December 31, 2019 Table of Contents Glossary .............................................................................................................................................