DTE Energy (NYSE:DTE) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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View the webcast at https://events.q4inc.com/attendee/727416035
Summary
DTE Energy reported a strong start to 2026 with operating earnings of $407 million, translating to $1.95 per share, positioning the company to achieve the high end of its operating EPS guidance.
The company is executing significant data center projects with Oracle and Google, which are expected to drive substantial affordability benefits for existing customers and require about $5 billion in incremental investments.
DTE Energy is focused on grid modernization and reliability improvements, with strategic infrastructure investments showing a 90% improvement in outage duration from 2023 to 2025.
The company maintains a 6-8% long-term operating EPS growth target through 2030, supported by data center opportunities, with potential to exceed this range as more projects are solidified.
DTE Energy plans to issue $500 to $600 million in equity annually through 2028 to support its capital investment plan while maintaining a strong investment-grade credit rating.
Full Transcript
Liz (Operator)
Thank you for standing by. My name is Liz and I’ll be your conference operator today. At this time I would like to welcome everyone to the DTE Energy first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one again. Thank you. I would now like to turn the call over to Matt Kierpinski, Director of Investor Relations. Please go ahead.
Matt Kierpinski (Director of Investor Relations)
Thank you and good morning everyone. Before we get started, I’d like to remind you to read the Safe harbor statement on page two of the presentation, including the reference to forward looking statements. Our presentation also includes references to operating earnings, which is a non GAAP financial measure. Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix. With us this morning are Joy Harris, President and CEO and Dave Rude, cfo. And now I’ll turn it over to Joy to start our call this morning.
Joy Harris (President and CEO)
Thanks, Matt. Good morning everyone and thank you for joining us. I’m happy to be with you today. I’ll start by saying 2026 is off to a strong start and that momentum gives us confidence in delivering an exceptional year for all of our stakeholders. As we have said before, our success begins with our team. We have a highly engaged organization that’s executing extremely well. Our team is focused on doing what’s right for our customers and communities and that strong employee engagement really shows up in our performance. A great example is our team’s response to a couple of large storms we experienced in the first quarter. During a January weather event, the team restored 100% of impacted customers within 48 hours. And during the March storm, a more significant event, we restored service to over 99% of the customers within 48 hours. This kind of performance reflects the commitment, preparation and pride our employees take in their work. I’m incredibly proud of how our team continues to show up for our customers when it matters most. We continue to execute our customer focused capital plan that strengthens the grid and improves reliability. These investments are essential to enhance the grid, to support our customers, and they’re being made with a clear focus on customer affordability. That focus is reflected in our recent rate case filing where we are targeting investments that drive the highest impact while carefully balancing customer affordability. Turning to data centers, we continue to see great progress. The 1.4 gigawatt Oracle Data center included in our plan is approved and construction is underway. We’ve also executed an agreement with Google to serve a 1 GW data center. This project represents incremental upside to our current long term plan and the contract has been submitted to the NPSC for approval. Beyond Oracle and Google, we continue to have constructive discussions with other potential customers. As those conversations progress, they represent additional upside to our capital plan over time. It’s also important to highlight that this data center growth provides real affordability benefits to our existing customers. These large loads help spread fixed system costs over a broader base and because these data centers use so much power, they absorb a significant portion of these costs which will provide meaningful benefits to existing customers as these loads ramp. As I’ve said, we are off to a great start in 2026 and well positioned to achieve the high end of our operating EPS guidance. We are confident in our long term operating EPS growth rate target of 68% through 2030 and we remain confident in our ability to reach the high end of our guidance range in each year driven by R and D tax credits and the flexibility they provide. The Google Data center project and other data center opportunities provide upside to this plan. Let me move to slide five to highlight our improvements in reliability we delivered meaningful reliability improvements in 2025 driven by a combination of strategic infrastructure investments, targeted process improvements and more favorable weather conditions. From 2023 to 2025, we achieved a 90% improvement in outage duration, reflecting both stronger system performance and faster restoration. We recorded our best all weather SADI performance in nearly 20 years, underscoring the impact of our sustained focus on reliability and and placing us in the top quartile of utilities nationwide. Last year we restored 99.9% of impacted customers within 48 hours, demonstrating continued improvement in storm response and operational execution. That momentum has carried into 2026 as we continue to successfully execute our reliability strategy. Earlier, I mentioned the strong storm response our team delivered during the first quarter. That performance was on full display during the March storm when we experienced wind gusts of more than 70 miles per hour for a sustained period. About 300,000 customers were impacted and thanks to dedication and hard work of our crews, nearly all customers had power restored within 48 hours. When we look back at a similar storm several years ago, the progress is clear. That earlier event, which was a little less severe, impacted more than 750,000 customers and restoration took significantly longer. The improvements we’re seeing today reflect years of targeted investment, improved processes and the commitment of our employees. This work continues to make a meaningful difference for our customers through less frequent outages, faster restoration and improved reliability, and demonstrates that when we invest in IT works. We are continuing our efforts to modernize our electric distribution system, including the installation of smart grid devices to improve outage detection and restoration times. We are also maintaining a disciplined focus on pull top maintenance, executing a robust tree trim program and advancing the ongoing rebuild of the 4.8 KV system, all of which are critical to long term reliability and those initiatives are already translating into measurable results. We remain on track to achieve our long term goals of reducing the number of power outages by 30% and cutting outage duration in half by 2029, reflecting our commitment to sustained improvement. Let me move to slide 6 to provide an update on data center developments. We continue to make steady progress executing and finalizing contractual agreements needed to support data center growth. The Oracle contracts are approved and construction is underway with load ramping over the next several years. The growth is supported by existing capacity and planned energy storage and the contracts are structured to ensure Oracle will cover the full cost of energy and capacity they need while also providing significant affordability benefits to our existing customers. Our project with Google also continues to advance. The contracts have been filed with the NPSC for approval and we expect their load to fully ramp by the end of 2028. The load ramp is supported by a balanced mix of resources including renewable generation, energy storage, demand, demand response and additional longer term generation that will be identified through the IRP process. As a result, meeting Google’s capacity needs could drive roughly $5 billion of incremental generation and storage investment through 2032. Importantly, these investments are supported by contracts that protect existing customers. We have a 20 year power supply agreement with minimum monthly charges combined with a separate clean capacity acceleration agreement that covers renewable and storage investments. Termination provisions combined with credit and collateral requirements are designed to protect existing customers and support affordability. This means that Google will cover the full cost of the energy and capacity they need while also providing affordability benefits to our other customers. Beyond these two projects, we remain highly engaged with additional data center opportunities. We’re in advanced discussions that could represent roughly 2 gigawatts of incremental load with additional projects in our pipeline that could add another three to four gigawatts over time. Importantly, we also expect additional demand as these customers continue to expand once the are on the system. Collectively, these opportunities would require investment in new baseload generation, renewables and related storage with the exact resource mix and timing to be refined through the IRP process. Overall, we see our strong pipeline continue to advance with disciplined execution that delivers growth while remaining focused on reliability and affordability. Let me move to slide 7 to describe the benefits these data centers provide and discuss our continued commitment to customer affordability. These data center projects bring on large, steady load that help spread fixed system costs and create meaningful affordability benefits for our existing customers. Once fully ramped, Oracle is expected to drive about $300 million of annual benefits to our existing customers, while the Google Data center is expected to generate roughly $1.7 billion of benefits over the life of the contract. These savings strengthen our affordability story, complementing the strong continuous improvement culture that we have developed over the years. Continuous improvement is part of how we operate every day and it underpins our ability to consistently deliver strong reliability while managing customer affordability. We’ve executed our investment plan with discipline while remaining highly focused on affordability for our customers. As the chart illustrates, our average annual bill increases over the past four years have been well below the national average and the Great Lakes region. One of our biggest sources of customer value is how we’re using new technologies. Advanced analytics are driving efficiencies, lowering cost and improving maintenance and storm response. Delivering customer focused efficiencies through technology remains a top priority for our team. Our transition from coal to natural gas and renewables is also reducing O and M costs, and the tax credits available under the Inflation Reduction act help to make our clean energy investments more affordable for customers. Today, the typical residential electric bill represents less than 2% of the median household income and our residential bills are 18% below the national average. We also continue to expand energy assistance for our most vulnerable customers, delivering millions of dollars in energy assistance and donating significantly to support nonprofits across Michigan. Overall, we are well positioned to sustain our historical success in managing customer affordability while continuing to invest in the grid and support long term growth. Let’s turn to the next slide and walk through our regulatory strategy and the benefits we are delivering to our customers. Our Electric rate case filing is an important step in supporting customer focused investment in system reliability and grid modernization while continuing to manage affordability. This rate case filing is predominantly driven by our Distribution Infrastructure Investment Plan, which is squarely focused on improving reliability and consistent with the recommendations from the Electric Distribution audit completed in 2024, this plan is focused on achieving our goal of reducing the frequency of power outages by 30% and cutting out its duration in half by 2029. As part of this filing, we’re requesting nearly $800 million of distribution investments to be incorporated into the IRM by 2030. This would support consistent, predictable infrastructure investments for our customers and could help delay future rate case filings. Our data center agreements are thoughtfully structured to enhance affordability and protect our customers. As I have already highlighted these, these contracts deliver significant affordability benefits with strong safeguards in place. As the load from these projects ramp, it creates the potential to extend the timing of our next DTE Electric rate case filing, delivering the benefits for our existing customers from these growth opportunities. While we continue to invest in improving reliability, we have proposed a regulatory mechanism in this current case to capture any excess margin from the Oracle Load Ramp above what we have included in our filing. If the Oracle load Ramp comes online by the end of 2027 and we receive other required regulatory approvals, we will refrain from filing another rate request until at least 2028. Looking longer term Our IRP will provide clear visibility into how we will serve growing demand, including the significant data center load. The IRP will lay out our approach to meeting long term generation and capacity needs with the filing expected in the third quarter of 2026. This is a transparent process that allows us to identify the most effective and affordable way to serve customers over time. Taken together, these efforts reflect a coordinated design, disciplined approach to growth, combining thoughtful regulatory filings, well structured large load agreements and long term resource planning to support reliability, affordability and visibility for our customers. So to wrap up, we’re off to a strong start in 2026. We’re executing our plan, making critical infrastructure investments, staying focused on affordability for our customers, delivering reliable, high quality service to communities we serve, and driving continued strong financial performance for our investors. With that, I’ll hand it over to Dave. Dave, over to you.
Dave Rude (Chief Financial Officer)
Thanks Joy and good morning everyone. As Joy mentioned, 2026 is off to a really strong start and we remain well positioned to achieve the high end of our operating EPS guidance this year. Let me start on Slide 9 to review our first quarter financial results. Operating earnings for the quarter were $407 million. This translates into $1.95 per share. You can find a detailed breakdown of EPS by segment, including a reconciliation to GAAP reported earnings in the Appendix. I’ll start the review at the top of the page with our Utilities DTE Electric earnings were $218 million. For the quarter, earnings were $71 million higher than the first quarter of 2025. The main drivers of the variance were timing of taxes, rate implementation and colder weather, partially offset by higher rate base and OM costs on the timing of taxes. If you remember we called out a variance of negative $67 million in the first quarter of last year due to the timing of renewal projects being placed in service, which was a key driver of the variance for the quarter. Moving on to DT Gas, operating earnings were $210 million, $4 million higher than the first quarter of 2025. The earnings variance was driven by colder weather and IRM revenue, partially offset by higher rate base costs. Let’s move to DT vantage on the third row. Operating earnings were $48 million for the first quarter of 2026. This is a $9 million increase from 2025 driven by higher custom Energy solutions and steel related earnings, partially offset by lower renewable earnings. On the next row you can see Energy Training earnings were $59 million lower than the first quarter of 2025. This was primarily driven by expected timing in the first quarter in the Power portfolio. We are highly confident in achieving the high end of the full year guidance range in energy trading as this timing reverses through contracted and hedge positions over the remainder of the year. Finally, Corporate and other was unfavorable by $54 million primarily due to the timing of taxes of $43 million and higher interest expense. Overall, DTE earned $1.95 per share in the first quarter of 2026, which positions U.S. well to achieve the high end …
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