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SEC filingStrong quarter with double-digit revenue and net income growth, driven by utility rate increases and renewable energy expansion, though operating cash flow declined due to working capital headwinds.
Operating income was $490 million, essentially flat compared to $494 million in the prior year, resulting in an operating margin of 17.9%. However, net income increased 11.8% to $340 million, and diluted earnings per share rose 8.9% to $1.10. The improvement in net income was driven by lower interest expense and other non-operating items, partially offset by higher depreciation and operating costs associated with the expanded asset base.
Net cash provided by operating activities was $705 million, down from $1.0 billion in the first quarter of 2025, primarily due to unfavorable working capital changes and higher capital expenditures. Capital expenditures surged to $1.04 billion, up from $888 million, as the company invested in grid modernization and clean energy projects. This resulted in negative free cash flow of -$334 million. CMS Energy expects to maintain access to capital markets to fund its investment plan, as stated in management commentary.
The company maintains a solid investment-grade profile, with ready access to financial and capital markets. Management continues to seek fair and timely regulatory treatment to support its customer-driven investment plan while pursuing cost-control measures to sustain customer base rates.
Looking ahead, CMS Energy expects weather-normalized gas deliveries to remain stable relative to 2025, reflecting modest growth in gas demand offset by energy waste reduction programs. The company is focused on achieving its clean energy goals through carbon offset measures, renewable natural gas, energy efficiency, and demand response programs, as well as adopting cost-effective emerging technologies once proven and commercially available. Consumers Energy expects to recover costs associated with these initiatives in customer rates, though no guarantee can be provided.