41 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Nov 2, 2018
Slide 1: Third Quarter Earnings Review and Business Update
THIRD QUARTER EARNINGS REVIEW AND BUSINESS UPDATE NOV. 2, 2018 PRESENTED BY: LYNN GOOD | CHAIRMAN, PRESIDENT AND CEO STEVE YOUNG | EXECUTIVE VP AND CFO
Slide 2: Safe Harbor statement
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 in the Appendix herein and i
Slide 3: Topics for today's call
Topics for today’s call BUSINESS UPDATE Lynn Good, Chairman, President & CEO • Third quarter 2018 update • Update on hurricane response • Progress on strategic initiatives 4 -6% HIGHLY ACHIEVABLE EPS GROWTH FINANCIAL UPDATE THROUGH 2022(4) Steve Young, Executive VP & CFO • Third quarter 2018 earning
Slide 4: Third quarter 2018 update
Third quarter 2018 update FINANCIAL HIGHLIGHTS $1.51 REPORTED DILUTED EPS • Raising the midpoint of 2018 EPS guidance range on strong FOR 3Q 2018 year-to-date results COMPARED TO $1.36 IN 3Q 2017 • Reaffirming 4-6% long-term growth CAGR through 2022 • Including expectations for low end of the range
Slide 5: Robust response to unprecedented storm activity
Robust response to unprecedented storm activity HURRICANE FLORENCE (Q3) • Staged over 20,000 personnel in advance of the storm – largest ever restoration force in the Carolinas • Over 1.8 million outages in the Carolinas • 93% restored within 5 days • No significant environmental impact from floodin
Slide 6: Continued momentum on grid modernization
Continued momentum on grid modernization IMPROVING THE GRID 1.2 MILLION SMART METERS • Received accounting order from S.C. Commission to defer INSTALLED YTD IN 2018 grid investments at DEP and DEC • Investing $500 million in battery storage in our Carolinas service territories per IRP filings • Inve
Slide 7: Advancing efforts to generate cleaner energy
Advancing efforts to generate cleaner energy ELECTRIC UTILITIES & INFRASTRUCTURE • Citrus County CCGT Unit 1 in service and Unit 2 on track for Dec. 2018 COD (DEF) • Western Carolinas Modernization Project on track for late 2019 COD (DEP) • Rogers dual-fuel project nearing completion • First H.B. 58
Slide 8: Making progress on natural gas infrastructure investments
Making progress on natural gas infrastructure investments ATLANTIC COAST PIPELINE UPDATE • Progressing on pipeline construction • Mainline and compressor stations in W.Va. and N.C. • Felling trees in W.Va., Va. and N.C. • Erosion and Sediment control plan approved in Va. • Requested FERC approval fo
Slide 9: 3Q 2018 adjusted diluted EPS summary and primary drivers
3Q 2018 adjusted diluted EPS summary and primary drivers SEGMENT RESULTS VS. PRIOR YEAR QUARTER (1) Electric Utilities & Infrastructure, +$71 M (+$0.10 per share) ADJUSTED DILUTED ▲ Volumes and weather EARNINGS PER SHARE ▲ Higher rider revenues ▲ Contribution from the DEP and DEC rate cases $3.87 $3
Slide 10: Customer growth and weather-normal electric volume trends
Customer growth and weather-normal electric volume trends Rolling 12-Month Retail Electric Volume Growth RESIDENTIAL 1.8% • Increase in average number of customers drives volume 1.0% growth for electric and gas utilities 1.1% • Positive electric usage per customer in certain -0.7% jurisdictions Resi
Slide 11: Reaffirming long-term earnings growth guidance
Reaffirming long-term earnings growth guidance REAFFIRMING LONG TERM GROWTH 2019 PRIMARY INVESTMENT CAGR OF 4-6%THROUGH 2022(1)(2) GROWTH DRIVERS 2020 AND Electric Utilities & Infrastructure 2019 EXPECT LOW END BEYOND • Carolinas OF THE GROWTH EXPECT MID TO HIGH END • NC rates effective mid-2018, SC
Slide 12: Our investor value proposition
Our investor value proposition A SOLID LONG-TERM HOLDING 4.5% ~8-10% 4 -6% DIVIDEND YIELD(1) ATTRACTIVE zzz HIGHLY WITH DIVIDEND RISK-ADJUSTED ACHIEVABLE GROWTH TOTAL SHAREHOLDER EPS GROWTH COMMITMENT(2) RETURN(3) THROUGH 2022(4) CONSTRUCTIVE JURISDICTIONS, LOW-RISK REGULATED INVESTMENTS AND BALANCE
Slide 13: Appendix materials
Appendix materials Item Slide(s) Update on key 2018 assumptions 14 – 16 3Q 2018 supplemental data 17 – 21 Financial supplement 22 – 25 Tax reform summary 26 – 27 Other information 28 – 32 THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 13
Slide 14: Update on key 2018 assumptions
Update on key 2018 assumptions THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 14
Slide 15: Key 2018 adjusted earnings guidance assumptions
Key 2018 adjusted earnings guidance assumptions ($ in millions) Original 2018 2018 YTD Assumptions (1) (thru 9/30/2018) Adjusted segment income/(loss) (2): Electric Utilities & Infrastructure $3,304 $2,702 Gas Utilities & Infrastructure $319 $204 Commercial Renewables $117 $84 Other ($383) ($256) Du
Slide 16: Key 2018 earnings sensitivities
Key 2018 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.45 Electric Utilities & $1 billion change in rate base +/- $0.07 Infrastructure 1% change in Electric Utilities volumes +/- $0.12 1% change in earned return on equity +/- $0.05 Gas Utilities & $200 million
Slide 17: 3Q 2018 supplemental data
3Q 2018 supplemental data THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 17
Slide 18: 3Q 2017 - 3Q 2018 adjusted diluted EPS waterfall
3Q 2017 - 3Q 2018 adjusted diluted EPS waterfall 3Q Weather Electric Utilities & Gas Utilities Commercial Other Share Dilution Impact Infrastructure & Infrastructure Renewables $0.07 $0.00 $0.03 ($0.04) ($0.03) $0.03 $1.69 $1.69 ▲ Higher earnings ▲ New solar $1.68 ▼ Lower tax shield from midstream p
Slide 19: YTD 2017 - YTD 2018 adjusted diluted EPS waterfall
YTD 2017 - YTD 2018 adjusted diluted EPS waterfall YTD 2018 Electric Utilities Gas Utilities THIRD Commercial Other Share Dilution Weather Impact & Infrastructure &QUARTER Infrastructure Renewables 2018 EARNINGS REVIEW AND $0.04 ($0.13) $0.03 $0.08 BUSINESS UPDATE ($0.03) $3.96 $3.99 ▲ Favorable ▲ C
Slide 20: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2018 2017 income to normal: Pretax impact Weighted avg. EPS impact(1) Pretax impact Weighted avg. EPS impact(1) diluted shares favorable / shares favorable / (unfavorable) (unfavorable) First Quarter $10 701 $0.01 ($175) 700 ($0.15) Second
Slide 21: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Rolling Twelve Months, as of Sept. 30, 2018 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.8% 2.3% 2.3% 1.7% 1.8% 1.4% 1.0% 1.1% 1.0% 1.1% 1.0% 0.7% 0.6% 0.6%
Slide 22: Financial supplement
Financial supplement THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 22
Slide 23: 2018 financing plan as of Sept. 30, 2018
2018 financing plan as of Sept. 30, 2018 (1)(2) ($ in millions) $2,500 Equity Priced Equity Issued issuance YTD Forward? YTD $2,000 March offering $1.6 B Yes $800 M (June) ATM $200 M Yes -- DRIP $134 M No $134 M $1,500 Total $1.9 B $934 M $1,000 $500 $- Duke Duke Duke Duke Duke Piedmont Commercial E
Slide 24: 2018 long-term debt financing activity as of Sept. 30, 2018
2018 long-term debt financing activity as of Sept. 30, 2018 Credit Ratings Amount Entity Date Issued (M/S&P/F, unless Term Type Rate ($ in millions) otherwise noted) $500 DE Carolinas March 2018 Aa2/A 5-Year First Mortgage Bond Fixed – 3.05% $500 DE Carolinas March 2018 Aa2/A 30-Year First Mortgage
Slide 25: Liquidity summary as of Sept. 30, 2018
Liquidity summary as of Sept. 30, 2018 ($ in millions) Duke Duke Duke Duke Duke Duke Duke Piedmont Energy Energy Energy Energy Energy Energy Energy Natural Corp. Carolinas Progress Florida Indiana Ohio Kentucky Gas Total Master Credit Facility (1) $ 2,650 $ 1,750 $ 1,400 $ 650 $ 600 $ 300 $ 150 $ 50
Slide 26: Tax reform summary
Tax reform summary THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 26
Slide 27: Tax reform: regulatory activity and timeline
Tax reform: regulatory activity and timeline Riders in all jurisdictions include the lower federal income tax rate as they are updated/filed Proposed/Approved Treatment of: Amortization period for Status Docket Lower tax rate EDIT Unprotected EDIT Utilizing tax reform to offset Hurricane Irma costs,
Slide 28: Other information
Other information THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 28
Slide 29: Upcoming events
Upcoming events Event Date EEI Financial Conference Nov. 11-13, 2018 4Q 2018 earnings call (tentative) Feb. 14, 2019 THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 29
Slide 30: Investor relations contact information
Investor relations contact information MIKE CALLAHAN, VICE PRESIDENT INVESTOR RELATIONS ▪ Michael.Callahan@duke-energy.com ▪ (704) 382-0459 MIKE SWITZER, DIRECTOR INVESTOR RELATIONS ▪ Mike.Switzer@duke-energy.com ▪ (704) 382-6473 ABBY MOTSINGER, MANAGER INVESTOR RELATIONS ▪ Abby.Motsinger@duke-energ
Slide 31: Safe Harbor statement
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 o
Slide 32: For additional information on Duke Energy
For additional information on Duke Energy, please visit: www.duke-energy.com/investors THIRD QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 32
Slide 33: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Third Quarter Earnings Review & Business Update November 2, 2018 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Third Quarter Earnings Review and Business Update on November 2, 2018, include a discu
Slide 34: Adjusted Diluted EPS Guidance
Adjusted Diluted EPS Guidance The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 2, 2018, include a reference to the original 2017 adjusted diluted EPS guidance range of $4.50 - $4.70 per share with a midpoint of $4.60 per share and the forecasted 2018 adju
Slide 35: Adjusted Effective Tax Rate (ETR)
Adjusted Effective Tax Rate (ETR) The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 2, 2018 include a discussion of the adjusted ETR for the quarters and year-to-date periods ended September 30, 2018 and 2017. The materials also include a discussion of the
Slide 36: Reported to Adjusted Earnings Reconciliation, Three Months Ended Sept. 30, 2018
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2018 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve Impacts Reported Piedmont Impairment of the Tax Discontinued Total Adjusted Earnings Merger Charges Act Operations
Slide 37: Reported to Adjusted Earnings Reconciliation, Nine Months Ended Sept. 30, 2018
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2018 (Dollars in millions, except per-share amounts) Special Items Costs to Regulatory Achieve and Sale of Reported Piedmont Legislative Retired Impairment Impacts of Discontinued Total Adjusted Earn
Slide 38: Reported to Adjusted Earnings Reconciliation, Three Months Ended Sept. 30, 2017
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2017 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve Commercial Reported Piedmont Florida Renewables Discontinued Total Adjusted Earnings Merger Settlement Impairments
Slide 39: Reported to Adjusted Earnings Reconciliation, Nine Months Ended Sept. 30, 2017
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2017 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve Commercial Reported Piedmont Florida Renewables Discontinued Total Adjusted Earnings Merger Settlement Impairments
Slide 40: Adjusted Effective Tax Reconciliation
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION September 2018 (Dollars in millions) Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Balance Effective Tax Rate Balance Effective Tax Rate Reported Income From Continuing Operations Before Income Taxes $ 1,230 $
Slide 41: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2018 (In millions) Cash and Cash Equivalents $ 303 Less: Certain Amounts Held in Foreign Jurisdictions (7) Less: Unavailable Domestic Cash (82) 214 Plus: Remaining Availability under Master Credit Facilities and other fac