41 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Aug 10, 2020
Slide 1: Earnings Review & Business Update
Earnings Review & Business Update SECOND QUARTER 2020 Lynn Good Chair, President and CEO Steve Young Executive Vice President and CFO August 10, 2020
Slide 2: Safe Harbor statement; Regulation G disclosure
Safe Harbor statement This presentation includes forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from such forward- looking statements. The factors that could cause actual results to differ are discussed herein and in Duke Energy’s
Slide 3: Safe harbor statement
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 and can often be identified by
Slide 4: Topics for today's call
Topics for today’s call BUSINESS UPDATE Lynn Good, Chair, President & CEO 2020 financial overview, including COVID- 19 impacts Rate case status and updates Long-term company outlook FINANCIAL UPDATE Steve Young, Executive VP & CFO Second-quarter 2020 earnings drivers Load growth and econom
Slide 5: Delivering for our investors
Delivering for our investors SOLID SECOND-QUARTER RESULTS ($1.13)/$1.08 Adjusted EPS results for 2Q 2020 favorable to updated financial plan shared in May 2Q 2020 REPORTED/ ADJUSTED EPS 2Q 2020 load results favorable to our original COVID-19 forecast COMPARED TO $1.12 IN 2Q 2019 Strong cost mi
Slide 6: Update on key rate cases
Update on key rate cases FAIR AND CONSTRUCTIVE OUTCOME IN NORTH CAROLINA RATE CASES UNDERWAY INDIANA Hearings begin Aug. 24; expect final order by year-end Indiana Utility Regulatory Commission approved: 2020 ‒ Strategic investments to generate cleaner Favorable settlements with a broad group
Slide 7: Robust capital plan drives long-term shareholder value
Robust capital plan drives long-term shareholder value 5-YEAR $56 BILLION CAPITAL PLAN $56 billion capital plan drives shareholder value creation through 2024 ‒ ACP cancellation is a disappointing outcome for North Carolina, but the company is immediately adjusting to the evolving business conditi
Slide 8: Duke Energy's clean energy future vision for the Carolinas
Duke Energy’s clean energy future vision for the Carolinas Upcoming Carolinas IRPs will illustrate multiple pathways to a cleaner energy future Collaborating with Stakeholders to help shape path to achieve our climate goals PROGRESS ON THE PATH Electric TO A NET ZERO-CARBON FUTURE Carolinas Integr
Slide 9: 2Q 2020 adjusted EPS summary and primary drivers
2Q 2020 adjusted EPS summary and primary drivers REPORTED SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1) EARNINGS PER SHARE Electric Utilities & Infrastructure, -$56 M (-$0.08 per share) $2.36 2020 reported ▲ O&M mitigation efforts (+0.11 per share) results include ACP impairment of ▼ Unfavorable weather
Slide 10: 2Q retail electric volumes and full year expectations
2Q retail electric volumes and full year expectations 2Q 2020 RETAIL ELECTRIC VOLUMES(1) 2Q 2020 VOLUME TRENDS 2Q 2020 results favorable to our original COVID-19 2Q expectations were a forecast shared in May 5% total retail decline of (9%) ‒ Higher margin residential volumes were strong, partially
Slide 11: O&M cost savings underway with measurable impacts to 2Q results
O&M cost savings underway with measurable impacts to 2Q results Highly confident in achieving a $350-$450 million $ in millions reduction in O&M and other expenses to mitigate 2020 headwinds $450 ‒ Unparalleled capability to mitigate headwinds given $400 our size, scale and agility Clear line-of
Slide 12: Early considerations regarding 2021 earnings outlook
Early considerations regarding 2021 earnings outlook $56 BILLION, 5-YEAR CAPITAL PLAN 2021 earnings per share, prior to cancellation of ACP, REMAINS INTACT were trending to ~$5.50(1) Incremental Grid ‒ ACP was expected to contribute ~$0.35 of EPS in $56 B Incremental Investments $56 B 2021 Additio
Slide 13: Our focus on a strong balance sheet and consistent dividend
Our focus on a strong balance sheet and consistent dividend KEY MESSAGES INCREASED QUARTERLY DIVIDEND PAYMENT FOR THE 14TH Strong available liquidity position of $8.7 billion as of Jun. 30 CONSECUTIVE YEAR Stable outlooks at Moody’s and S&P Expect to receive remaining refundable AMT credits of
Slide 14: Our investor value proposition
Our investor value proposition A STRONG LONG-TERM RETURN PROPOSITION 4.6% ~8-10% 4 -6% LONG-TERM EPS DIVIDEND YIELD(1) zzz ATTRACTIVE GROWTH WITH LONG-TERM RISK-ADJUSTED DIVIDEND GROWTH TOTAL SHAREHOLDER ANCHORED BY LOW- COMMITMENT(2) RETURN(3) RISK REGULATED INVESTMENTS(4) CONSTRUCTIVE JURISDICTION
Slide 15: Appendix
Appendix SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 15 // 15
Slide 16: Delivering for our customers during the pandemic
Delivering for our customers during the pandemic OUTSTANDING CUSTOMER SERVICE & OPERATIONAL PERFORMANCE Achieved all-time high in customer satisfaction measures in the second quarter, reinforcing the effectiveness of our customer and community outreach Successfully completed four nuclear refueli
Slide 17: 2020 financial supplement
2020 financial supplement SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 17 // 17
Slide 18: Key 2020 adjusted earnings guidance assumptions
Key 2020 adjusted earnings guidance assumptions ($ in millions) Original 2020 2020 YTD Assumptions (1) (thru 6/30/2020) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,640 $1,458 Gas Utilities & Infrastructure $530 $299 Commercial Renewables $240 $147 Other ($540) ($271
Slide 19: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2020 2019 income to normal: Pretax Weighted EPS Pretax Weighted EPS impact avg. shares impact favor impact avg. shares impact favor able / able / (unfavorable) (unfavorable) First Quarter ($110) 734 ($0.11) ($55) 727 ($0.06) Second Quarter
Slide 20: COVID-related cost and waived fees update
COVID-related cost and waived fees update Expect to Existing Reporting Regulatory Actions Underway / Recently Resume State Rider for Incremental COVID- Ordered Normal Credit Bad Debts Related Costs Practices Filed a joint petition (DEC & DEP) in August with North the NCUC for deferral treatment of i
Slide 21: Key 2020 earnings sensitivities
Key 2020 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.52 $1 billion change in rate base +/- $0.07 Electric Utilities & Infrastructure 1% change in retail volumes: Industrial +/- $0.02 (2) +/- $0.15(1) (2) Commercial +/- $0.05 (2) Residential +/- $0.08 (2) 1% c
Slide 22: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities Rolling Twelve Months, as of June 30, 2020 1.8% 0.5% 0.7% 0.5% 0.7% 0.7% -0.5% -1.5% -2.0% -2.2% -1.9% -2.2% -2.6
Slide 23: Financing plan update and current liquidity
Financing plan update and current liquidity SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 23 // 23
Slide 24: 2020 Financing plan
2020 Financing plan(1) Planned Amount Completed 2020 Issuer Security Date Issued Term Rate ($ in millions) ($ in millions) Maturities(4) Senior Notes or other LT $350 Holding Company $1,000 - $1,500 securities (excludes bank $500 May 2020 10-Year 2.45% (June, 2020) loan borrowings in 1Q) Common $160
Slide 25: Liquidity summary (as of June 30, 2020)
Liquidity summary (as of June 30, 2020) ($ in millions) Duke Duke Duke Duke Duke Duke Piedmont Duke Energy Energy Energy Energy Energy Energy Natural Energy Carolinas Progress Florida Indiana Ohio Kentucky Gas Total Master Credit Facility (1) $ 2,650 $ 1,500 $ 1,250 $ 800 $ 600 $ 450 $ 150 $ 600 $ 8
Slide 26: Sustainability / Environmental Social and Governance (ESG)
Sustainability / Environmental Social and Governance (ESG) SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 26 // 26
Slide 27: Duke Energy environmental track record
Duke Energy environmental track record Carbon-free Generation (%) (MWh) (1) Duke Energy’s nuclear fleet generates enough electricity to power 7 million homes carbon-free DUKE ENERGY 55% 47% 47% 45% IS A LEADER IN 41% 39% DUK 33% 32% 30% CARBON-FREE 28% 28% 28% 27% 27% Peer GENERATION Avg. 1% Regulat
Slide 28: Renewables portfolio growth
Renewables portfolio growth 2020 RENEWABLES PROJECTS COMMITTED TO DOUBLE Megawatts RENEWABLES PORTFOLIO BY 2025 Fuel Site Solar Wind Cell COD Business 16 GW Columbia 74.9 - - Mar 2020 Regulated DeBary 74.5 - - May 2020 Regulated Palmer 60 - - Apr 2020 Commercial Holstein 200 - - Jun 2020 Commercial
Slide 29: Duke Energy issued updated Climate Report in April 2020
Duke Energy issued updated Climate Report in April 2020 PATH TO A LOW- DUKE ENERGY’S CLIMATE REPORT HIGHLIGHTS CARBON FUTURE Updated report informed by new carbon reduction goals announced Sept. 2019 Collaborate and align ‒ Reduce CO2 emissions by at least 50% by 2030(1) and achieve net zero by wi
Slide 30: Duke Energy's long-term culture of sustainability
Duke Energy’s long-term culture of sustainability 2019 SUSTAINABILITY REPORT HIGHLIGHTS 2019/2020 RECOGNITIONS CUSTOMERS For the 14th consecutive year, Duke Reached a cumulative, multiyear reduction in customer energy Energy was named to the Dow Jones consumption of ~19,000 GWH and reduction in
Slide 31: Upcoming events & other
Upcoming events & other SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 31 // 31
Slide 32: Upcoming events
Upcoming events Event Date 2020 ESG Investor day October 9, 2020 3Q 2020 earnings call Early November 2020 SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE //// 32 32
Slide 33: Investor relations contact information
Investor relations contact information BRYAN BUCKLER, VICE PRESIDENT INVESTOR RELATIONS Bryan.Buckler@duke-energy.com (704) 382-2640 CINDY LEE, DIRECTOR INVESTOR RELATIONS Cynthia.Lee@duke-energy.com (980) 373-4077 SECOND QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE //// 33 33
Slide 34: For additional information on Duke Energy, please visit duke-energy.com/investors
For additional information on Duke Energy, please visit: duke-energy.com/investors
Slide 35: Non-GAAP Reconciliations: Adjusted Earnings per Share
Duke Energy Corporation Non-GAAP Reconciliations Second Quarter Earnings Review & Business Update August 10, 2020 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Second Quarter Earnings Review and Business Update on August 10, 2020, include a discussion of
Slide 36: Adjusted Segment Income (Loss) and Adjusted Other Net Loss
Adjusted Segment Income (Loss) and Adjusted Other Net Loss The materials for Duke Energy’s Second Quarter Earnings Review and Business Update on August 10, 2020, include a discussion of adjusted segment income (loss) and adjusted other net loss for the quarter and year-to- date periods ended June 30
Slide 37: Available Liquidity; Dividend Payout Ratio
Available Liquidity The materials for Duke Energy’s Second Quarter Earnings Review and Business Update on August 10, 2020, include a discussion of Duke Energy’s available liquidity balance. The available liquidity balance presented is a non-GAAP financial measure as it represents cash and cash equiv
Slide 38: Reported to Adjusted Earnings Reconciliation, Three Months Ended June 30, 2020
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended June 30, 2020 (Dollars in millions, except per share amounts) Special Item Total Adjusted Reported Loss ACP Adjustments Earnings SEGMENT INCOME (LOSS) Electric Utilities and Infrastructure $ 753 $ — $ — $ 753 Gas
Slide 39: Reported to Adjusted Earnings Reconciliation, Six Months Ended June 30, 2020
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Six Months Ended June 30, 2020 (Dollars in millions, except per-share amounts) Special Items Reported Total Adjusted Earnings ACP Severance Adjustments Earnings SEGMENT INCOME Electric Utilities and Infrastructure $ 1,458 $ — $ — $
Slide 40: Effective Tax Reconciliation
DUKE ENERGY CORPORATION EFFECTIVE TAX RECONCILIATION June 2020 (Dollars in millions) Three Months Ended Six Months Ended June 30, 2020 June 30, 2020 Effective Tax Effective Tax Balance Rate Balance Rate Reported Loss Before Income Taxes $ (1,208) $ (181) ACP 2,000 2,000 Severance — (98) Noncontrolli
Slide 41: Available Liquidity Reconciliation as of June 30, 2020
Duke Energy Corporation Available Liquidity Reconciliation As of June 30, 2020 (In millions) Cash and Cash Equivalents $ 341 Less: Certain Amounts Held in Foreign Jurisdictions (10) Less: Unavailable Domestic Cash (87) 244 Plus: Remaining Availability under Master Credit Facilities and other facilit