Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Non-Deal Roadshow (December 2006)
27 slides from Duke Energy Corporation (Holding Company)'s roadshow presentation, December 2006
Slide 1: Duke Energy
Duke Energy December 2006 Jim Rogers President and Chief Executive Officer David Hauser Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements and you should refer to the additional
Slide 3: Investment Highlights
Investment Highlights • One of the leading power infrastructure companies in the U.S. • Low-risk business profile Approximately 85% of total ongoing segment EBIT from utility operations • Strong earnings growth and total return 4 – 6% ongoing diluted EPS growth from 2007 base Dividend growth i
Slide 4: Low Risk Business Profile
Low Risk Business Profile U.S. Franchised Commercial Duke Energy Crescent Electric & Gas Power International Resources Regulated generation, Unregulated generation Primarily Latin Real estate T&D and LDC American assets joint venture 28,000 net MW 8,700 net MW ~85% of Duke Energy’s generating capaci
Slide 5: U.S. Franchised Electric & Gas
U.S. Franchised Electric & Gas Highlights 5 States: North Carolina, South Carolina, Indiana, Ohio and Kentucky 47,000 square mile service territory 28,000 net MW of generating capacity 3.9 million retail electric customers 500,000 retail gas customers Approximately $16 billion in retail
Slide 6: Commercial Power, International and Crescent
Commercial Power, International and Crescent • Commercial Power 8,700 net MW of non-regulated generation assets in the Midwest Substantially all EBIT associated with retail customer sales • International Primary focus on Brazil, Peru and Argentina 4,200 net MW; ~75% hydro; ~80% contracted
Slide 7: Drivers for Positive Regulatory Outcomes
Drivers for Positive Regulatory Outcomes • Reliable operations • Low prices for customers • Limited fuel price volatility • High customer satisfaction December 2006 7
Slide 8: Reliable Operations and Low Prices
U.S. Franchised Electric & Gas Reliable Operations and Low Prices Bundled Retail Rate Comparison • Operating measures Cents / kwh % National Avg. Nuclear capacity factor: National Average 8.54 95% Duke Energy Fossil/hydro commercial SC 5.46 64% availability: 93% IN 5.98 70% • Rates well below th
Slide 9: Limited Fuel Price Volatility
U.S. Franchised Electric & Gas Limited Fuel Price Volatility 100% of fuel costs recovered through trackers YTD as of Sept 30 100% 1% each for gas/oil and hydro 12% 90% 80% 18% 33% 70% 60% 18% 50% 40% Hydro 30% 65% 52% Gas/Oil 20% Nuclear 10% Coal 0% Duke Energy Duke Energy Net MW Capacity MWh Dispat
Slide 10: History of Constructive Regulatory Outcomes
History of Constructive Regulatory Outcomes • Acquired more than 1,300 MW of peaking capacity to meet growing customer demand in NC, SC and IN • Rate increase in Indiana for $1.3 billion in rate base additions • Recovery of Indiana IGCC feed study costs • Reached settlement in Kentucky for rate incr
Slide 11: Regulatory and Legislative Initiatives
Regulatory and Legislative Initiatives Carolinas NC rate resolution Recovery of nuclear development costs CPCN authority to build coal plant Nuclear and fossil CWIP tracker Midwest Ohio RSP extension post-2008 and/or legislation CPCN authority to build IGCC plant Potential electric and
Slide 12: Earnings Growth Drivers
Earnings Growth Drivers • Steady sales growth • Enhanced cost reductions due to merger savings • Significant capital reinvestment December 2006 12
Slide 13: Steady Sales Growth and Enhanced Cost Reductions
U.S. Franchised Electric & Gas Steady Sales Growth and Enhanced Cost Reductions • 65,000 new customers per year Economic development efforts are paying off • Consistent focus on cost control Merger Savings • $650 million net savings over five years • Merger-related rate reductions to substantial
Slide 14: Capital Investment Drives Earnings Growth
Capital Investment Drives Earnings Growth • Required capacity growth Regulated: ~6,400 additional MWs required within 10 years Ohio: Immediate need for another 1,500 MW • Three-year plan includes approximately $9 billion of capex Cliffside coal plant in North Carolina New IGCC plant in India
Slide 15: Financial Overview
Financial Overview David Hauser Chief Financial Officer
Slide 16: Ongoing Earnings Growth
Ongoing Earnings Growth • 2007 employee incentive target of $1.15 per share Based on ongoing diluted EPS • 4 – 6% ongoing diluted EPS growth from 2007 base • Earnings growth from: Full year of earnings from Midwest operations (2007 impact) Realization of cost savings Customer sales growth
Slide 17: 2007 Ongoing EBIT Expectations
2007 Ongoing EBIT Expectations ($ in millions) US Franchised Electric & Gas $ 2,300 Commercial Power (1) 200 Duke Energy International 315 Crescent Resources (2) 100 Total Ongoing Segment EBIT $ 2,915 Other (215) Total Ongoing Segment and Other EBIT $ 2,700 (1) Includes net negative purchase account
Slide 18: 2007 Assumptions
2007 Assumptions • Effective tax rate of 33% in 2007 Effective tax rate without the impact of synfuel credits would be 35.5% • Interest expense expected to be approximately $625 million • Target includes approximately $80 million of pre-tax interest income related to cash balances • Plan reflects
Slide 19: 2007 Cash Flows
2007 Cash Flows ($ in millions) 2007 Primary Sources: Estimate Net income $ 1,450 (Based on $1.15 per share target and 1,270 million shares) Depreciation & amortization 1,875 Total Sources $ 3,325 Primary Uses: Capital expenditures $ (3,325) Dividends (1,075) Other sources/(uses), net (25) Total Use
Slide 20: Capital Expenditures
Capital Expenditures ($ in millions) 2007 2008 2009 Expansion $ 600 $ 1,150 $ 1,775 Environmental 750 475 150 Nuclear Fuel 150 200 150 Maintenance and Other 1,350 1,325 1,125 Non-regulated (1) 475 350 300 Total Cap Ex $ 3,325 $ 3,500 $ 3,500 (1) Includes Commercial Power and International December 2
Slide 21: Re-investment Supports Earnings Growth
Re-investment Supports Earnings Growth ($ in billions) ~20% Increase in 2006 – 2009 Rate Base U.S. Franchised Electric & Gas Rate Base Approximate current rate base $ 16 $9 Less: Depreciation & amortization (5) $2 OH/KY $(5) Capital expenditures 9 IN $4 $20 Estimated 2009 rate base $ 20 NC/SC $10 Cu
Slide 22: Strong Balance Sheet / Financial Flexibility
Strong Balance Sheet / Financial Flexibility • Expect to maintain solid, investment-grade credit metrics • Debt/capitalization ratio projected to be in the low-40% range by 2009 • Allows rate base growth without equity issuance • Flexibility for up to $500 million share buyback program S&P S&P Duke
Slide 23: Value Proposition
Value Proposition Annual Total Return Profile • Proactive regulatory strategy 15% • 2007 EPS incentive target of $1.15 per share, based on ongoing diluted EPS 10% • 4 – 6% ongoing diluted EPS growth through 2009 5% • 70 – 75% dividend payout ratio; expect dividend growth 0% consistent with EPS growt
Slide 24: Non-GAAP Reconciliation for SEC Regulation G
Duke Energy Corporation Non-GAAP Reconciliation for SEC Regulation G December 2006 Investor “Road Shows” Anticipated Ongoing Diluted Earnings-per-share (“EPS”) Growth Percentages The materials for Duke Energy’s December 2006 Investor “Road Show” presentations include a discussion of the anticipated
Slide 25: Forecasted 2007 Ongoing Segment and Other EBIT
Forecasted 2007 Ongoing Segment and Other EBIT The materials for Duke Energy’s December, 2006 Investor “Road Show” presentations include a discussion of forecasted 2007 ongoing EBIT for Duke Energy’s reportable segments and for Other, which represents the remainder of Duke Energy’s operations. Forec
Slide 26: Cash Flow Reconciliation Required by SEC Regulation G
Duke Energy Corporation Consolidated December 2006 Investor "Road Show" Cash Flow Reconciliation Required by SEC Regulation G ($ in Millions) Forecast 2007 Primary Sources: Net income (Based on $1.15 per ongoing diluted share target) (1) a $ 1,450 Depreciation & amortization a 1,875 Total Sources 3,
Slide 27: Forecasted 2006 Ongoing Segment EBIT
Duke Energy Corporation Non-GAAP Reconciliation for SEC Regulation G December 2006 Investor “Road Shows” Forecasted 2006 Ongoing Segment EBIT Remarks made during Duke Energy’s December, 2006 Investor “Road Show” presentations included a discussion of previously announced forecasted 2006 ongoing segm