CMS Energy Q1 Earnings Call Highlights

Key Points

• CMS reported first-quarter adjusted EPS of $1.13 and reaffirmed full-year guidance of $3.83–$3.90, with management expressing confidence toward the high end and maintaining a long-term target of high-end 6%–8% adjusted EPS growth.
• Regulatory outcomes were constructive: the Michigan PSC approved over 65% of the electric rate request with a 9.9% ROE and gas staff backed over 75% of a $240 million gas ask, while the June IRP will include 1.5 GW of new gas capacity and 13 GW of renewables.
• Management highlighted a large-load pipeline (historically ~9 GW qualified), recent data-center and industrial contract wins, and said each additional 1 GW of load could imply $2B–$5B of incremental capital; CMS plans ~$700M equity issuance in 2026 (with ~$495M forwards executed) while Moody’s moved the utility to a negative outlook.

CMS Energy NYSE: CMS reported first-quarter 2026 adjusted earnings of $1.13 per share and reaffirmed its full-year and long-term financial targets, as executives emphasized constructive regulatory outcomes in Michigan, ongoing customer affordability efforts, and a growing pipeline of large-load economic development opportunities.

Quarterly results and guidance reaffirmed

CMS posted adjusted net income of $346 million, or $1.13 per share, for the first quarter of 2026. Chief Executive Officer Garrick Rochow said the company remains confident in its 2026 outlook and reaffirmed guidance of $3.83 to $3.90 per share for the year, adding that management has “continued confidence toward the high end.” Rochow also reiterated the company’s longer-term target of delivering toward the high end of its 6% to 8% adjusted EPS growth range.

Chief Financial Officer Rejji Hayes said performance versus the year-ago quarter was driven “largely due to NorthStar outperforming a relatively soft comp” in the first quarter of 2025 and “higher rate relief net investments at the utility,” partially offset by “a significant ice storm” in March.

Hayes detailed several key first-quarter drivers versus 2025, including:

• Weather: Heating degree days were “relatively normal” for the quarter, producing about $0.01 per share of favorable variance versus the first quarter of 2025.
• Rate relief and investments: Rate relief, net of investment-related expenses, contributed $0.11 per share of positive variance, reflecting residual benefits of prior electric and gas rate orders and earnings tied to ongoing renewable projects at the utility.
• Storm costs: Increased storm activity, including the March ice storm, resulted in $0.05 per share of negative variance, with some offsets in the electric supply business.
• Other items: A $0.04 per share positive variance was attributed to renewable milestone achievements at NorthStar and a reversal of the prior-year outage at DIG, partially offset by higher parent financing costs including a higher average share count.

Regulatory updates: electric rate case outcome and gas case progress

Rochow highlighted the company’s latest electric rate case outcome, noting that the Michigan Public Service Commission approved “over 65% of our ask” and maintained a 9.9% return on equity in the electric business. He said the company’s rate case record reflects “deliberate, customer-focused investments” aimed at improving grid reliability and resiliency, including “advanced tree trimming on a five year cycle.”

On the gas side, Rochow said the company received the MPSC staff position in April in its current gas rate case, with staff recommending “over 75% of our $240 million ask” and supporting “nearly 95%” of the company’s gas infrastructure investments. He said CMS has settled “four of the last five cases” and continues to see support for its filings.

Later in the Q&A, Rochow confirmed the company plans to file its next electric rate case in June. For the gas case, he said a proposal for decision is expected around August, with a final order in the “September, October-ish” timeframe if the case goes “the full distance.”

IRP to include new gas capacity and large renewable buildout

Rochow said CMS plans to file its 20-year integrated resource plan (IRP) in June. The IRP is expected to include 1.5 gigawatts of new natural gas capacity to replace retiring generation, along with 13 gigawatts of renewable and clean energy, much of which he said had already been approved in the company’s 20-year renewable energy plan.

Rochow said the IRP will also include a “growth scenario” tied to increasing customer interest in the state, including data centers and manufacturing. Hayes later explained that additional load would increase supply needs “commensurately with that load ramp,” but said it is “premature” to conclude whether incremental opportunities would immediately raise the company’s EPS growth rate within the current planning horizon.

Economic development and data centers: load growth, pipeline, and timing

Management repeatedly returned to large-load growth opportunities, particularly data centers. Rochow said the company’s qualified pipeline has historically been “roughly about 9 GW,” and added that the pipeline is “actually much larger than 9 GW” when including less-qualified opportunities. He also said the company signed contracts for roughly 100 MW of new load last year and has already signed approximately 110 MW year-to-date in the first quarter—on top of about 450 MW connected last year.

Rochow cited a recently signed contract with Michigan Potash and Salt Company, which he described as “a strategic and critical mineral manufacturer” associated with roughly 130 jobs and “over $1.3 billion of investment in Michigan.”

On data centers, Rochow said an “announced data center” is closing in on a final contract after reaching commercial terms on both an “extraordinary facilities agreement” and the related rate contract. He added that another data center has been progressing in “advanced contract negotiations.”

Rochow said these data centers are not reflected in the company’s current five-year investment plan and emphasized that associated investments “will not be subsidized by existing customers.” He also stated that “each gigawatt of new data center load that materializes in our service territory will reduce our average customer rate by 2% annually over a five year period.”

Asked about the Gaines Township zoning process tied to a Microsoft data center, Rochow described Michigan’s local zoning structure and said there are “several steps” involving planning commissions and township boards. He said he was “pleased” with progress and community engagement, while also underscoring that elected officials are doing due diligence on topics including property taxes, land use, and water. When asked about timing, Rochow said project timelines remain unchanged: “2028 is the timeline within the contracts,” with load ramping further into 2029 and 2030.

Hayes and Rochow also addressed the potential scale of incremental capital needs tied to large-load growth. Rochow said CMS has identified that “for every 1 GW of new large load, we could see capital opportunity of $2 billion-$5 billion,” incremental to the current plan. Hayes said the low end assumes storage plus a simple-cycle combustion turbine and related infrastructure, while the high end reflects potential resource changes such as combined-cycle gas, additional wires and substations, and additional clean energy law compliance needs as sales grow.

Financing plan, equity forwards, and credit outlook

Hayes said the company’s financing plan for 2026 includes issuing approximately $700 million of equity over the course of the year. He added that CMS executed equity forward contracts totaling about $495 million during the first quarter and settled approximately $142 million of those contracts in the quarter, citing the stock’s trading levels relative to plan assumptions.

Looking beyond 2026, Hayes reiterated prior commentary on average equity needs of about $750 million per year over the following four years, while noting it is “far from linear” and “a bit more front-end loaded,” with the “majority of the equity needs” expected in the first three years of the five-year plan. He said CMS may consider executing additional equity forwards to de-risk future years if trading levels are favorable.

On credit, Hayes said Moody’s and Fitch reaffirmed CMS’s credit ratings in March, though Moody’s moved the utility to a negative outlook due to the size of the five-year capital plan relative to the timing of cost recovery for large projects. Hayes said the company is evaluating “a variety of countermeasures,” but was not prepared to elaborate, noting constraints at the operating company given rate-making capital structure considerations.

Throughout the call, Rochow and Hayes emphasized affordability as a core planning constraint. Rochow pointed to Michigan electric bills being the “fourteenth lowest in the nation,” while Hayes said CMS does not present a financial plan externally “unless it passes the laugh test from an affordability perspective,” describing a framework that considers rate and bill growth over time, benchmarked against regional and national comparisons.

About CMS Energy NYSE: CMS

CMS Energy NYSE: CMS is an energy company based in Jackson, Michigan, whose principal business is the regulated utility operations of its subsidiary, Consumers Energy. The company is primarily focused on providing electric and natural gas service to customers in Michigan, operating the generation, transmission and distribution infrastructure necessary to deliver energy to residential, commercial and industrial customers. Headquartered in Jackson, CMS Energy conducts its core activities within the state and is regulated by state utility authorities.

Through Consumers Energy and related subsidiaries, CMS Energy develops, owns and operates a portfolio of generation assets and delivers a range of customer-facing services, including electricity and natural gas supply, grid management, energy efficiency programs and demand-response offerings.

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