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    CMS
    Earnings call· Mar 2026(Q1 FY26)

    CMS ENERGY Q1 FY26 earnings call CMS

    Apr 28, 2026 Source

    Executive summary

    CMS Energy Q1 FY26 — Strong Start with Reaffirmed Guidance and Growing Economic Development

    CMS Energy delivered a strong Q1 FY26, reaffirming its full-year EPS guidance and long-term growth outlook, driven by constructive regulatory outcomes and robust economic development in Michigan. The company is actively managing its capital plan and financing needs while addressing a negative credit outlook from Moody's, maintaining a focus on customer affordability and a growing large-load pipeline.

    Highlights

    5

    • Reported adjusted EPS of $1.13 in Q1 FY26, comparing favorably to the comparable period in 2025.

    • Electric rate case approved over 65% of the company's ask and maintained a 9.9% ROE.

    • MPSC staff supported over 75% of the $240 million gas rate case ask and nearly 95% of gas infrastructure investments.

    • Signed 110 MW of new load contracts year-to-date in Q1 FY26, exceeding the 100 MW signed in all of last year.

    • Michigan electric bills are the 14th lowest in the nation, well below national and Midwest averages.

    Concerns

    3

    • Experienced a significant ice storm in March, resulting in $0.05 per share negative variance from storm activity.

    • Moody's moved the utility to a negative outlook in March due to the size of the 5-year capital investment plan relative to cost recovery timing.

    • Higher parent financing costs, including the effects of equity dilution, partially offset positive variances in Q1 FY26.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2026 Adjusted EPS
    $3.83 to $3.90 per share
    high materiality
    High
    Long-term Adjusted EPS Growth Rate
    6% to 8%
    high materiality
    High
    Multi-year Capital Investment Plan
    over $24 billion
    high materiality
    High
    Annual Sales Growth
    2% to 3%
    medium materiality
    High

    Operational metrics

    22
    Adjusted Net Income
    $346 millioncompares favorably to the comparable period in 2025
    Q1 FY26

    Key driver of Q1 EPS performance.

    Weather impact on EPS
    $0.01favorable variance versus the first quarter of 2025
    Q1 FY26

    Relatively warm March and February offset a cold January.

    Rate relief net of investments impact on EPS
    $0.11positive variance
    Q1 FY26

    Positive impact from regulatory outcomes and renewable projects.

    Storm activity impact on EPS
    $0.05negative variance
    Q1 FY26

    Impact from an uptick in storm activity, partially offset by electric supply business.

    Other impact on EPS
    $0.04positive variance
    Q1 FY26

    Catch-all category for Q1 variances.

    Expected weather impact on EPS
    $0.23negative variance
    Remaining 9 months FY26

    Based on planning for normal weather.

    Expected regulatory impact on EPS
    $0.24positive variance
    Remaining 9 months FY26

    Expected positive impact from regulatory and project benefits.

    Expected O&M expense impact on EPS
    $0.04positive variance
    Remaining 9 months FY26

    Anticipated lower O&M expenses.

    Expected other impact on EPS
    $0.06 to $0.13positive variance
    Remaining 9 months FY26

    Expected impact from NorthStar and financing.

    New Load Contracts Signed
    110exceeded 100 megawatts signed last year
    YTD Q1 FY26

    Represents new customer expansions and contracts.

    New Load Contracts Signed
    100
    FY25

    Total new load contracts signed in the prior year.

    Load Connected
    450
    FY25

    Load connected to the system in the prior year.

    Michigan Potash & Salt Company Investment
    $1.3 billion
    null

    Investment by a strategic mineral manufacturer expanding in the service territory.

    Data Center Load Impact on Customer Rate
    2%reduce
    Annually over 5 years

    Expected benefit to existing customers from new data center load.

    Equity Forward Contracts Executed
    $495 million
    Q1 FY26

    Executed to address financing needs.

    Equity Contracts Settled
    $142 million
    Q1 FY26

    Portion of equity forward contracts settled during the quarter.

    Equity Needs (average)
    $750 million
    Annually

    Average annual equity needs for the subsequent years of the 5-year plan.

    NorthStar Earnings Mix
    5%
    null

    Contribution of non-utility assets to overall earnings.

    New Gas Capacity in IRP
    1.5to replace existing retiring capacity
    Future (20-year IRP)

    Part of the upcoming Integrated Resource Plan.

    Renewable and Clean Energy in IRP
    13
    Future (20-year IRP)

    Part of the upcoming Integrated Resource Plan.

    Grid Interconnection Queue (Large Load Pipeline)
    9
    Current

    Total size of the large load pipeline, including data centers and manufacturing.

    Non-Data Center Opportunities in Large Load Pipeline
    15%
    Current

    Proportion of the large load pipeline represented by non-data center opportunities.

    Industry KPIs

    7
    MetricValueDetails
    Adjusted operating EPS$1.13USD/share
    Multi year capital plan$24 billionUSD
    Dividend per share growth3%%
    Regulatory rate base growthlow double-digit%
    Allowed ROE equity layer rate cases9.9%%
    Combined electric gas framework mandates—
    Major regulated project construction progress—

    Orderbook & backlog

    1
    Large Load Pipeline (Qualified)9 gigawattsQ1 FY26

    roughly about 9 gigawatts. Those are the ones that are more qualified, you might say, in the process.

    Deals & partnerships

    3
    Michigan Potash & Salt CompanyStrategic and critical mineral manufacturer expanding in service territory.$1.3 billion investment

    Expanding in the only established and sustainable potash reserve in the U.S.

    Undisclosed Data Center (Hyperscaler)Data center project

    Reached commercial terms on extraordinary facilities agreement and rate contract.

    Undisclosed Data Center (Hyperscaler)Data center project

    Another data center project in advanced negotiations.

    Capital programs

    1
    5-year Capital Investment Planunderwayover $24 billion
    Funding: self-funding 2/3 to 3 quarters of that rate growth with, as Garrick noted, CE Way episodic cost reductions, energy waste reduction over time we hope it will be sales growth
    Start: FY26

    Benefit: investing heavily in the electric grid to improve reliability and resiliency, safety of the gas system

    This plan is the basis for the company's investment and growth strategy, with a focus on reliability, resiliency, and safety.

    Risks & headwinds

    4
    Significant ice storm activityQ1 FY26 (March)

    $0.05 per share of negative variance

    Mitigation: positive offsets associated with our electric supply business (partial offset)

    Moody's negative outlook on utility credit ratingMarch 2026

    Moody's did move the utility to a negative outlook

    Mitigation: evaluating a variety of countermeasures to address Moody's concerns; continue to target solid investment-grade credit ratings and will manage our key credit metrics accordingly

    Higher parent financing costs and equity dilutionQ1 FY26 and remaining 9 months FY26

    Partially offset positive variances in Q1 FY26; expected to partially offset positive variances for remaining 9 months.

    Mitigation: Opportunistic use of convertible debt and equity forward contracts to derisk financing needs.

    Weather variabilityRemaining 9 months FY26

    $0.23 per share of negative variance expected for remaining 9 months of FY26

    Mitigation: Planning for normal weather, which equates to a negative variance compared to favorable temperatures in 2025.

    What to watch in Q2 FY26

    5

    Data Center Contract Finalization

    Next quarter / soon
    Currentclosing in on final contract after reaching commercial terms on the extraordinary facilities agreement and now commercial terms on the rate contract
    TargetFinalized contract and public announcement

    Why it matters

    Finalization of this contract would confirm a significant new large load, driving future capital investment and load growth.

    Our announced data center continues to close in on final contract after reaching commercial terms on the extraordinary facilities agreement and now commercial terms on the rate contract.

    Q&A highlights

    5

    Asked about the current state of data center opportunities and if their materialization could defer electric rate case filings, similar to DTE's approach.

    Garrick Rochow expressed satisfaction with data center progress, noting a 9 GW pipeline of qualified customers and advanced contract negotiations for hyperscalers. He highlighted the existing tariff that protects customers and provides benefits. He explained the company's commitment to annual rate cases due to a large capital runway, the need to pass savings to customers, and the focus on affordability, which is supported by growth from data centers.

    “But the biggest thing and the most important thing is affordability for our customers right now. And we've talked about that through the CE way. We've talked about that through episodic cost savings. But a big piece of this is growth, and that's how I tie it back to data centers.”

    asked by Richard Sutherland from Truist · answered by Garrick Rochow

    2 min read6 chapters

    Detailed Narrative

    01

    Regulatory Strategy and Outcomes

    CMS Energy highlighted its consistent track record of constructive regulatory outcomes in Michigan, attributing it to a deliberate and disciplined strategy. The recent electric rate case approved over 65% of the company's ask and maintained a 9.9% ROE. For the gas rate case, MPSC staff recommended over 75% of the $240 million ask and supported nearly 95% of gas infrastructure investments, reinforcing the company's ability to secure necessary capital recovery for customer investments.

    02

    Integrated Resource Plan (IRP) and Future Capacity

    The company plans to file its 20-year IRP in June, which will include 1.5 GW of new gas capacity to replace retiring units and 13 GW of renewable and clean energy, much of which is already approved. A key component of the IRP will be a "growth scenario" highlighting the need for additional capacity to meet growing customer demand, particularly from data centers and manufacturing, which could add $2 billion to $5 billion in capital opportunity for every 1 GW of new large load.

    03

    Economic Development and Load Growth

    Michigan is experiencing significant economic growth, attracting new manufacturing, industrial processing, and data center interest. CMS Energy signed 110 MW of new load contracts year-to-date in Q1 FY26, surpassing the 100 MW signed in all of last year. The company emphasized the diversity of this growth, citing Michigan's high number of engineers per capita, diverse agriculture, and aerospace/defense businesses, which supports 2-3% annual sales growth.

    04

    Data Center Progress and Affordability

    The company provided an update on its data center pipeline, noting progress on advanced contract negotiations and community engagement for multiple hyperscaler projects. Management stressed that these data centers are not yet reflected in the current 5-year capital plan and associated investments will not be subsidized by existing customers. Each gigawatt of new data center load is expected to reduce the average customer rate by 2% annually over a five-year period, contributing to overall affordability.

    05

    Customer Affordability Initiatives

    CMS Energy remains focused on customer affordability, with Michigan electric bills ranking 14th lowest nationally and bill growth below the energy CPI. The company achieves this through initiatives like the CE Way, digital automation, episodic cost savings, load growth, and energy waste reduction, while simultaneously investing over $24 billion in its electric and gas systems over the 5-year plan period.

    06

    Q1 Financial Performance and Outlook

    The company reported adjusted EPS of $1.13 for Q1 FY26, driven by NorthStar's outperformance and higher rate relief. This was partially offset by a significant ice storm in March, which caused a $0.05 per share negative variance. Despite this, CMS Energy reaffirmed its full-year 2026 adjusted EPS guidance of $3.83 to $3.90 per share, with confidence towards the high end, and its long-term 6-8% adjusted EPS growth target.

    AI-generated summary of the company’s earnings call. Not investment advice.