CMS Energy Corporation Q2 FY26 Earnings Analysis

- Projecting 2% to 3% low growth in sales volume over the next five years, supported by new and expanding customer loads including manufacturing, industrial processing, and data centers. (Page 12) - Signed 110 megawatts of new load year-to-date, with expectations that these will connect and ramp gradually through the 5-year period. (Page 12) - Data center and economic development backlog may drive incremental capital investment starting around 2028, with material load ramping more evident in 2028-2030 timeframe. (Page 11) - Growth pipeline includes diverse sectors beyond data centers such as manufacturing and food processing, contributing over 1 gigawatt of non-data center opportunities which carry positive spillover effects. (Page 14) - Long-term EPS growth guidance remains at the high end of 6% to 8%. (Page 3) - New data center load not yet in 5-year plan but expected to reduce average customer rates by ~2% annually over five years as load grows. (Page 3)

- Full-year adjusted EPS guidance for the current year is reaffirmed at $3.83 to $3.90, with confidence toward the high end. - Long-term adjusted EPS growth is targeted at the high end of a 6% to 8% annual growth range. - Growth in earnings is supported by new load growth, including data centers and other economic development opportunities, expected to ramp notably starting around 2028 and beyond. - While new large load conversions may create upward capital expenditure pressure, they are anticipated to drive rate base growth and thus earnings expansion over time. - Additional capital investments linked to new customer loads, including renewables and gas-fired units, provide incremental growth opportunities beyond the 5-year plan. - Financial planning prioritizes affordability, supporting sustainable growth in earnings without disproportionate rate increases.

- Economic development backlog includes large load prospects not in current customer investment plan; converting these could increase CapEx by $2B to $5B per gigawatt, especially with combined cycle gas and infrastructure needs (Page 15, 10). - Additional capital investment opportunities expected if large load conversions happen, putting upward pressure on financing (Page 15). - Ongoing investments in electric grid reliability and resiliency to improve customer experience (Page 5). - Compliance with Michigan clean energy laws requires capital spending on renewables and batteries, included in CapEx range (Page 10). - Planning to file electric and gas rate cases in 2024 aligned with capital plans (Page 12). - Five-year capital plan involves roughly $700M equity issuance in 2024, averaging $750M annually thereafter, front-end weighted for capital needs (Page 8). - Integrated Resource Plan (IRP) will guide 20+ year investment strategy including natural gas, renewables, and batteries (Page 13).

- In 2026, CMS Energy plans to issue approximately $700 million in equity, with most equity needs front-loaded in the first 3 years of the 5-year plan (per Rejji Hayes, Page 8). - They have executed equity forward contracts totaling about $495 million to derisk 2026 equity needs, with $142 million settled in Q1 (Page 4). - Additional equity issuances may occur if the stock trades at favorable levels, potentially to derisk 2027 and beyond (Page 8). - On the debt side, convertible debt was opportunistically issued last November to address much of 2026’s financing needs at the parent level, offering flexibility (Page 4). - The utility plans to complete the balance of its financing plan opportunistically over the remainder of the year (Page 4). - Moody’s moved the utility to a negative outlook due to large capital investment plans, prompting exploration of countermeasures including revisiting financing strategy (Page 13).

- The company has a 9-gigawatt backlog, with approximately 15% (over 1 gigawatt) represented by non-data center opportunities. - There are at least two hyperscalers in advanced contract negotiations, with more prospects in the pipeline. - The backlog includes diverse development pipeline opportunities beyond data centers, such as manufacturing and food processing. - Progress is underway on projects like Michigan Potash, though specific timelines are not yet disclosed. - The company's capital plan indicates sensitivity to large load conversions, with every gigawatt potentially leading to $2 billion to $5 billion of incremental CapEx, which would increase financing needs. - The company expects incremental equity investment opportunities due to growth-capital investments associated with large customers.