Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q1 2011 Earnings Presentation
41 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, May 3, 2011
Slide 1: First Quarter Earnings Review and Business Update
FIRST QUARTER Earnings Review and Business Update May 3, 2011 Jim Rogers Chairman, President and Chief Executive Officer Lynn Good Group Executive and Chief Financial Officer
Slide 2: Safe Harbor
SAFE HARBOR SAFE HARBOR STATEMENT This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-look
Slide 3: Safe Harbor (Cont'd)
SAFE HARBOR (CONT’D) REG G DISCLOSURE In addition, today's discussion includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available on our Investor Relations website at www.duke-energy.com
Slide 4: Topics for Today's Call
TOPICS FOR TODAY’S CALL 1Q 2011 earnings review and financial update Status of merger filings Status of major construction projects Edwardsport project and procedural schedule update Standard Service Offer (SSO) filing status and next steps in Ohio Proposed EPA regulations Outlook for
Slide 5: 1Q 2011 Earnings: Progress on Earnings Objectives
1Q 2011 EARNINGS: PROGRESS ON EARNINGS OBJECTIVES Adjusted Diluted EPS Reported Diluted EPS 2011 Status On-Track to Achieve $1.35 - $1.40 EPS* $0.36 $0.39 $0.34 $0.38 * Based on Adjusted Diluted EPS 1Q 2010 1Q 2011 1Q 2010 1Q 2011 Reported to Adjusted Reconciliation 1Q11 1Q10 Reported Diluted EPS $
Slide 6: 1Q 2011 Earnings Summary and Drivers
1Q 2011 EARNINGS SUMMARY AND DRIVERS USFE&G Adjusted Segment EBIT Drivers – 1Q11 Adjusted Segment EBIT (in millions) 1Q11 1Q10 ▼ Unfavorable weather – ($59M) US Franchised Electric and Gas $ 712 $ 744 ▼ Increased O&M costs – ($57M) ▲ Increased pricing and AFUDC, primarily from ongoing Commercial Pow
Slide 7: Normalized Volume Trends – USFE&G
NORMALIZED VOLUME TRENDS – USFE&G Residential Commercial Change vs. Prior Year Quarter Change vs. Prior Year Quarter 1.5% <1% 0.9% <1% 0.1% 0.0% 0.1% -0.2% -0.4% -0.9% -1.5% -2.1% 1Q10 2Q10 3Q10 4Q10 1Q11 2011E 1Q10 2Q10 3Q10 4Q10 1Q11 2011E Industrial US FE&G Total Change vs. Prior Year Quarter Cha
Slide 8: Duke Energy Ohio Customer Switching Update
DUKE ENERGY OHIO CUSTOMER SWITCHING UPDATE DE Ohio Generation Providers Customer switching levels (based on customer load) remained stable during 1Q 2011 16% 16% 18% 19% 20% 21% As of March 31, 2011 23% 25% 26% 26% 26% 26% 26% 26% 27% 27% 23% 24% 27% 29% ~67% gross switching 30% 32% 33% 37% 38% 3
Slide 9: Status of Merger Filings
STATUS OF MERGER FILINGS (As of May 3, 2011) Progress on Stakeholder Filed Approved Key Milestones Filed initial S-4 for SEC review on March 17, 2011; Shareholder On April 8, 2011 and April 25, 2011, filed amendments to S-4 Shareholder meetings in 2Q/3Q 2011 Department of Justice The parties
Slide 10: Status of Major Construction Projects
STATUS OF MAJOR CONSTRUCTION PROJECTS (AS OF 3/31/2011) Edwardsport – Indiana • 618 MW IGCC facility USFE&G Major Construction Projects1 • Expected in-service in 2012 • Project is ~85% complete $405 • Cost increase pending before the IURC Cliffside – Carolinas $650 • 825 MW advanced clean-coal unit
Slide 11: Update on Edwardsport Project
UPDATE ON EDWARDSPORT PROJECT Edwardsport Cost Cap Proposal IGCC-4S1 Phase I Schedule 1 Date In testimony filed with the Indiana Utility Duke supplemental testimony filed Mar 10 Regulatory Commission (IURC) on March 10, 2011, Duke Energy Indiana proposed the Intervenors’ testimony due Jun 30 follo
Slide 12: Duke Energy Ohio MRO Update
DUKE ENERGY OHIO MRO UPDATE Market Rate Offer (MRO) Filing In November, Duke Energy Ohio filed an MRO application to replace its Electric Security Plan, which expires the end of this year In February, the Public Utilities Commission of Ohio (PUCO) ruled that Duke Energy Ohio’s MRO application wa
Slide 13: Pending EPA Regulations Will Impact U.S. Generation
PENDING EPA REGULATIONS WILL IMPACT U.S. GENERATION Proposed Regulations Duke Energy Domestic Generation Considerations for EPA Coal Combustion Coal Generation Profile Transition period must TODAY – 16.8 GW POST MODERNIZATION* – 16.6 GW Residuals (Coal Ash) be reasonable to allow 10% 14% utilities
Slide 14: Duke Energy Nuclear Fleet
DUKE ENERGY NUCLEAR FLEET Duke Energy’s Nuclear Fleet A Culture of Excellence The U.S. nuclear industry has a long history of safe operation and continuous improvement McGuire Nuclear Station We fully support the NRC’s review of U.S. nuclear operations based on events in Japan, and will actively
Slide 15: Key Priorities for 2011
KEY PRIORITIES FOR 2011 Overall US Franchised Electric & Gas Commercial Businesses • Obtain merger approvals • Obtain constructive regulatory • Achieve a constructive and finalize integration outcomes outcome for the new Ohio planning SSO agreement • Advance legislative agenda • Continued operationa
Slide 16: Appendix
APPENDIX Item Slides Update on Key 2011 Assumptions 17 Segment Results 18-25 Environmental Information 26-28 Nuclear Fleet Summary 29 Additional Financial Information 30-32 Upcoming Activities 33 16 First Quarter Earnings Review and Business Update May 3, 2011
Slide 17: Update on Key Assumptions for 2011
UPDATE ON KEY ASSUMPTIONS FOR 2011 ($ in Millions) 2011 FY 2011 YTD Assumptions (thru 3/31/11) USFE&G Adjusted Segment EBIT $2,995 $712 Commercial Power Adjusted Segment EBIT $215 $95 International Adjusted Segment EBIT $550 $180 Other Adjusted Net Expense $220 $34 Interest Expense $920 $219 Debt AF
Slide 18: US Franchised Electric and Gas
US FRANCHISED ELECTRIC AND GAS Reported & Adjusted Segment EBIT 1Q11 1Q10 ($ in Millions) Reported Segment EBIT $ 712 $ 744 Adjustments -- -- Adjusted Segment EBIT $ 712 $ 744 USFE&G Adjusted Segment EBIT Quarter-over-Quarter Drivers (in millions) Adjusted segment EBIT decreased primarily due to: $1
Slide 19: Key Regulatory Filings and Dates
KEY REGULATORY FILINGS AND DATES IGCC CWIP Riders 5&6 – Indiana January 2009 Ice Storm Deferral Request – Indiana Docket: 43114 – IGCC 5 and 43114 – IGCC 6 Docket: 43743 Key Dates: Key Dates: March 22nd – Duke’s testimony filed September 6th and September 8th – Evidentiary April 26th –
Slide 20: Maintain Focus on Operational Performance
MAINTAIN FOCUS ON OPERATIONAL PERFORMANCE Nuclear Generation Capacity Factor Fossil Generation Commercial Availability 100% 100% 90% 90% 80% 80% 70% 70% 1Q11 2Q11 3Q11 4Q11 1Q11 2Q11 3Q11 4Q11 2011 Year-End Target Actual 2011 Year-End Target Actual Nuclear Total Operating Cost – $/MWh Total Fossil P
Slide 21: Industrial Volume Quarterly Trends
INDUSTRIAL VOLUME QUARTERLY TRENDS Primary Metals Textiles Billed GwH Billed GwH 2,000 1,500 1,500 1,000 1,000 08 08 08 08 08 10 11 10 08 09 10 500 09 10 09 10 08 09 10 500 09 09 08 09 10 09 10 11 - - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Chemicals Total Industrial Billed GwH Billed GwH 1,500 12,000 9,000 1,000 6
Slide 22: USFE&G Quarterly Weather Impacts
USFE&G QUARTERLY WEATHER IMPACTS ($ in Millions) Weather EBIT to Normal: 2011 2010 First Quarter $ -- $ 60 Second Quarter $ 80 Third Quarter $120 Fourth Quarter $ 60 Full Year $ -- $320 Note: Favorable/(Unfavorable) Key Weather Data (1Q2011) ►Heating Degree Days Carolinas – 1,769 (3% higher than nor
Slide 23: Commercial Power
COMMERCIAL POWER Reported & Adjusted Segment EBIT ($ in Millions) 1Q11 1Q10 Reported Segment EBIT $ 91 $ 129 Adjustments 4 (29) Adjusted Segment EBIT $ 95 $ 100 Commercial Power Adjusted Year-over-Year Drivers (in millions) Segment EBIT Adjusted segment EBIT decreased primarily due to: $200 • $45 mi
Slide 24: International
INTERNATIONAL Reported & Adjusted Segment EBIT 1Q11 1Q10 ($ in Millions) Reported Segment EBIT $ 180 $ 140 Adjustments -- -- Adjusted Segment EBIT $ 180 $ 140 International Adjusted Segment (in millions) Year-over-Year Drivers EBIT Adjusted segment EBIT increased primarily due to: $200 • $20 million
Slide 25: Other
OTHER Reported & Adjusted Net Expense (Income) 1Q11 1Q10 ($ in Millions) Reported Net Expense (Income) $ 45 $ 146 Adjustments (11) (75) Adjusted Net Expense $ 34 $ 71 Other Adjusted Net Expense Year-over-Year Drivers (in millions) Adjusted Net Expense decreased primarily due to: $150 • $16 million d
Slide 26: Pending Environmental Regulations
PENDING ENVIRONMENTAL REGULATIONS Coal Combustion Residuals (CCR) Air Toxics Rule Regulates coal combustion residuals (e.g., coal ash) Utility boiler Maximum Achievable Control Technology (MACT) rule regulating Hazardous Air Pollutants (e.g., mercury) New rule proposed in June 2010 New rule
Slide 27: Positioning Our Coal Fleet for EPA Regulations
POSITIONING OUR COAL FLEET FOR EPA REGULATIONS Coal Generation Profile - Current Plans for Coal Generation Without Controls Retirement commitments associated with Cliffside Unit 6: Dan River, Cliffside 1-4, and Buck 3&4 ~600MW to be Carolinas Carolinas 3.5 GW 2.5 GW 1.7 GW retired in 2011/12 ~7.
Slide 28: Duke Energy Steam Facility Data
DUKE ENERGY STEAM FACILITY DATA1 Structure Operating State Jurisdiction Steam Unit Facility Owned Capacity (MW) Fuel Type Current Cooling Method Emissions Controls Regulated In Operation DE Carolinas Allen 1127 Coal Once-Through Scrubber Regulated In Operation DE Carolinas Belews Creek 2220 Coal Onc
Slide 29: Duke Energy Nuclear Fleet
DUKE ENERGY NUCLEAR FLEET Station Operating Owned Technology In- License Oconee Nuclear Station Capacity Capacity Service Expiration Seneca, SC (MWs) (MWs) Oconee 2,538 2,538 3 Babcock & 1973 Units 1 & 2 – Wilcox 2033 Pressurized Water Reactors Unit 3 – 2034 (PWR) McGuire Nuclear Station Huntersvill
Slide 30: Attractive Dividend Policy
ATTRACTIVE DIVIDEND POLICY Duke Energy dividend policy to be maintained Continued growth in dividend at a rate slower than growth of adjusted diluted EPS Targeting a long-term payout range of 65% to 70% of adjusted diluted EPS Attractive payout and yield underscores compelling shareholder va
Slide 31: Liquidity
LIQUIDITY Liquidity (as of March 31, 2011) ($ in millions) Duke DE DE DE DE Energy Carolinas Ohio Indiana Kentucky Total (1) Master Credit Facility $ 1,097 $ 840 $ 650 $ 450 $ 100 $ 3,137 (2) Regional Bank Credit Facility 100 100 - - - 200 Less: Notes Payable and Commercial Paper (3) - (300) - (150)
Slide 32: 2011 Summary Cash Flows
2011 SUMMARY CASH FLOWS ($ in Millions) 2011E Primary Sources: Adjusted Net Income (1) $ 1,825 Expected 2011 Financing Plan Depreciation & Amortization 2,000 Deferred and Accrued Taxes 910 Estimated Debt Scheduled Debt ($ in Millions) (3) (4) Other Sources / (Uses), net (2) (600) Issuances Maturitie
Slide 33: Upcoming Activities
UPCOMING ACTIVITIES Event Date Second Quarter 2011 Earnings Call August 2nd 11:00 a.m. Third Quarter 2011 Earnings Call November 3rd 11:00 a.m. Fourth Quarter 2011 Earnings Call TBD 33 First Quarter Earnings Review and Business Update May 3, 2011
Slide 34: First Quarter Earnings Review and Business Update May 3, 2011
34 First Quarter Earnings Review and Business Update May 3, 2011 34
Slide 35: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations First Quarter Earnings Review & Business Update May 3, 2011 Adjusted Diluted Earnings per Share (“EPS”) The materials for Duke Energy Corporation’s (“Duke Energy”) First Quarter Earnings Review and Business Update on May 3, 2011 include a discussion o
Slide 36: Adjusted Segment EBIT and Adjusted Other Net Expenses
financial measure is not available at this time, as management is unable to project special items or mark-to- market adjustments for future periods. Adjusted Segment EBIT and Adjusted Other Net Expenses for 2011 and 2010 and Forecasted Adjusted Segment EBIT and Adjusted Other Net Expenses for 2011 T
Slide 37: Ohio Customer Switching Impact
March 31, 2011, approximately 67% of Electric Security Plan customer load has switched to alternative energy providers, and approximately 60% of that switched customer load has been acquired by DERS, for a net switching percentage of approximately 27%. The level of customer switching in Ohio began t
Slide 38: Adjusted to Reported Earnings Reconciliation, March 2011 YTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION March 2011 Year-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Economic Adjusted Achieve, Hedges (Mark- Total Reported Earnings Progress Merger to-Market) * Adjustments Earnings SEGMENT EARN
Slide 39: Adjusted to Reported Earnings Reconciliation, March 2010 YTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION March 2010 Year-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) Voluntary Costs to Opportunity Achieve, Plan/ Office Economic Adjusted Cinergy Consolidation Hedges (Mark- Total Reported Earnings Merge
Slide 40: 2011 Forecasted Cash Flow Reconciliation
Duke Energy Corporation 2011 Forecasted Cash Flow Reconciliation, Required by SEC Regulation G First Quarter Earnings Review and Business Update May 3, 2011 ($ in millions) Forecast 2011 Primary Sources: Adjusted net income (1) (a) $ 1,825 Depreciation & amortization (a) 2,000 Deferred and accrued t
Slide 41: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of March 31, 2011 ($ in millions) Cash and Cash Equivalents $1,419 Less: Amounts Held in Foreign Jurisdictions (871) $548 Plus: Remaining Availability under Master Credit and Regional Bank Credit Facilities 2,482 Total Available Liquidity