A harsh winter made life difficult for many Michigan
residents, but it drove big business at utilityCMS Energy (
The company, with a market capitalization of just over $8
billion, provides electric and gas utility services primarily in
Michigan. It also owns and operates independent power generation
First-quarter earnings on Thursday were solid with profit up
42% from the year-ago quarter to 75 cents a share. Sales jumped
27% to just over $2.5 billion. Results were helped by extreme
cold weather, which increased natural gas deliveries and electric
Total gas deliveries at its Consumer Energy subsidiary were
23% above the company's expectations. In Q1, CMS delivered nearly
160 billion cubic feet of natural gas to its 1.7 million
The company's stated strategy is to continue to expand and
strengthen its gas distribution, transmission and storage
capabilities. Over the next 10 years, CMS plans to invest $5
billion in gas transmission, distribution and storage
In Q1, the company announced plans to acquire a 540-megawatt
clean-burning natural gas power plant in Michigan. The deal is
expected to close in 2015. Meanwhile, construction continues on a
24-mile natural gas pipeline in Southwest Michigan.
According to CFO Tom Webb, the company's investment model has
improved gross operating cash flow by about $100 million each
year. Investment hasn't hurt margin either. In 2013, annual
pretax margin hit a multiyear high of 13.6%.
CMS energy is showing signs of accumulation and is in the
early stages of breaking out of a long consolidation that started
nearly a year ago.
Earlier this month, the company announced a quarterly dividend
of 27 cents a share, giving it a yield of 3.6%. CMS hasn't been
shy about raising its dividend in recent years. It currently
boasts a long-term annualized dividend growth rate of 20%.