Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q2 2019 Earnings Presentation
42 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Aug 6, 2019
Slide 1: Duke Energy Earnings Review & Business Update
August 6, 2019 SECOND QUARTER 2019 Duke Energy Earnings Review & Business Update Lynn Good Chairman, President & CEO Steve Young Executive Vice President & 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
Slide 3: Topics for today's call
Topics for today’s call BUSINESS UPDATE Lynn Good, Chairman, President & CEO ▪ Second quarter 2019 update ▪ Progress on strategic initiatives ▪ North Carolina update FINANCIAL UPDATE Steve Young, Executive VP & CFO ▪ Second quarter 2019 earnings drivers ▪ Economic conditions and load growth trends ▪
Slide 4: Second quarter 2019 update
Second quarter 2019 update FINANCIAL HIGHLIGHTS ▪ EPS growth of 6% through the first half of the year $1.12 2Q 2019 REPORTED/ADJUSTED DILUTED EPS ▪ Strong growth in the quarter in all three operating COMPARED TO $0.71/$0.93 IN 2Q 2018 segments driven by ongoing investments and constructive regulator
Slide 5: Generating cleaner energy
Generating cleaner energy ELECTRIC UTILITIES AND INFRASTRUCTURE ▪ $1.1 billion WCMP combined cycle (DEP) on target for late- 2019 completion ▪ Filed Indiana IRP July 1; includes accelerated coal plant retirements and additional renewables ▪ Solar and battery investments advancing in FL under settlem
Slide 6: Expanding natural gas infrastructure
Expanding natural gas infrastructure Phase 1 ATLANTIC COAST PIPELINE ▪ Filed petition June 25th seeking SCOTUS review of the Appalachian Trail decision; DOJ and Solicitor General joined the appeal ▪ Expect SCOTUS to decide this fall whether it will agree to hear the appeal Phase 2 ▪ Received order f
Slide 7: North Carolina developments
North Carolina developments NORTH CAROLINA LEGISLATION NCDEQ COAL ASH ORDER ▪ SB559 would enable the NCUC to consider: ▪ NCDEQ issued order April 1 requiring low-priority ▪ Storm cost securitization sites be fully excavated ▪ Multi-year rate plans and/or ROE bands ▪ Company appealed the decision to
Slide 8: 2Q 2019 adjusted diluted EPS summary and primary drivers
2Q 2019 adjusted diluted EPS summary and primary drivers SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1) ADJUSTED DILUTED EARNINGS PER SHARE Electric Utilities & Infrastructure, +$98 M (+$0.13 per share(2)) ▲ Contribution from base rate changes $2.22 $2.36 ▲ Favorable timing of O&M expenses ▲ Higher rider
Slide 9: Customer growth and weather-normal electric volume trends
Customer growth and weather-normal electric volume trends ROLLING 12-MONTH RETAIL RESIDENTIAL ELECTRIC VOLUME GROWTH ▪ Increase in average number of customers in our attractive 0.7% service territories drives volume growth for electric and 0.6% gas utilities 0.5% ▪ Nearly 25% of all jobs created in
Slide 10: Other regulatory activity
Other regulatory activity ▪ Filed July 2; first rate case in 16 years and includes modernized regulatory mechanisms ▪ Requested 10.4% ROE and 53% equity cap. structure(1) DUKE ENERGY INDIANA BASE RATE CASE ▪ Based on Indiana rate base of $10.2 billion as of year-end 2018 and adjusted for projected c
Slide 11: Financing plan update
Financing plan update KEY MESSAGES ▪ S&P affirmed Duke Energy Corp. rating of BBB+, and INCREASED QUARTERLY revised the rating outlook to negative from stable DIVIDEND PAYMENT FOR THE ▪ Commercial Renewables minority stake sale closing on 13TH CONSECUTIVE YEAR track for fall 2019 ▪ ~$415 million pre
Slide 12: Our investor value proposition
Our investor value proposition A SOLID LONG-TERM HOLDING 4.3% ~8-10% 4 -6% DIVIDEND YIELD(1) zzz ATTRACTIVE HIGHLY WITH DIVIDEND RISK-ADJUSTED ACHIEVABLE GROWTH TOTAL SHAREHOLDER EPS GROWTH COMMITMENT(2) RETURN(3) THROUGH 2023(4) CONSTRUCTIVE JURISDICTIONS, LOW-RISK REGULATED INVESTMENTS AND BALANCE
Slide 13: Appendix
Appendix ITEM SLIDES Financial supplement 14-22 Sustainability / ESG 23-26 Other supplemental information 27-30 Upcoming events & other 31-35 SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS UPDATE // 13
Slide 14: Financial supplement
Financial supplement SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS UPDATE // 14
Slide 15: Key 2019 adjusted earnings guidance assumptions
Key 2019 adjusted earnings guidance assumptions ($ in millions) Original 2019 2019 YTD Assumptions (1) (thru 6/30/2019) Adjusted segment income/(expense)(2): Electric Utilities & Infrastructure $3,480 $1,559 Gas Utilities & Infrastructure $375 $266 Commercial Renewables $230 $99 Other ($440) ($204)
Slide 16: 2019 EPS Guidance and balance of the year considerations
2019 EPS Guidance and balance of the year considerations ADJUSTED DILUTED KEY CONSIDERATIONS(1) EARNINGS PER SHARE 3Q 2019 4Q 2019 O&M: • Potential reversal of 2019 YTD $4.80 - $5.20 favorable timing ($0.07) • 2018 favorable settlement on certain transmission costs ($0.03) • Return to normal storms
Slide 17: Key 2019 earnings sensitivities
Key 2019 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.49 Electric Utilities & $1 billion change in rate base +/- $0.07 Infrastructure 1% change in volumes +/- $0.13 1% change in earned return on equity +/- $0.06 Gas Utilities & $200 million change in rate base
Slide 18: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2019 2018 income to normal: Pretax impact Weighted avg. EPS impact Pretax impact Weighted avg. EPS impact diluted shares favorable / shares favorable / (unfavorable) (unfavorable) First Quarter ($55) 727 ($0.06) $10 701 $0.01 Second Quarte
Slide 19: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Rolling Twelve Months, as of June 30, 2019 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.4% 1.7% 1.9% 1.1% 1.0% 0.9% 0.6% 0.8% 0.7% 0.6% 0.7% 0.4% 0.3% 0.5%
Slide 20: 2019 financing plan as of June 30, 2019
2019 financing plan as of June 30, 2019 (1) ($ in millions) $2,000 Priced Equity Forward Equity issuance YTD Forward? Settled $1,750 ATM $340 M Yes Q4 $1,500 DRIP $80 M No n/a Total Common $420 M $1,250 $1,000 $750 $500 $250 $- Holding Duke Duke Duke Duke Duke Duke Piedmont Renewables Company Energy
Slide 21: 2019 long-term debt and preferred stock financing activity
2019 long-term debt and preferred stock financing activity as of June 30, 2019 Credit Ratings Amount Entity Date Issued (M/S&P/F, unless Term Type Rate ($ in millions) otherwise noted) $400 DE Ohio January 2019 A2/A 10-Year First Mortgage Bond Fixed – 3.65% $400 DE Ohio January 2019 A2/A 30-Year Fir
Slide 22: Liquidity summary as of June 30, 2019
Liquidity summary as of June 30, 2019 Duke Duke Duke Duke Duke Duke Piedmont ($ in millions) Duke Energy Energy Energy Energy Energy Energy Natural Energy Carolinas Progress Florida Indiana Ohio Kentucky Gas Total Master Credit Facility (1) $ 2,650 $ 1,750 $ 1,250 $ 800 $ 600 $ 300 $ 150 $ 500 $ 8,0
Slide 23: Sustainability / Environmental Social and Governance (ESG)
Sustainability / Environmental Social and Governance (ESG) SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS UPDATE // 23
Slide 24: Sustainability / ESG: Carbon and other reductions
Sustainability / Environmental Social and Governance (ESG) ▪ Targeting 40% reduction in carbon dioxide (CO2) emissions by 2030(1) ▪ Since 2005, decreased CO2 emissions by 31%, sulfur dioxide emissions CARBON AND OTHER by 96% and nitrogen oxides emissions by 74% REDUCTIONS ▪ 49 coal units retired (~6
Slide 25: Sustainability / ESG: Safety, employees and governance
Sustainability / Environmental Social and Governance (ESG) SAFETY – OUR NUMBER ONE PRIORITY ▪ Total Incident Case Rate (TICR) of 0.43 in 2018; one of the industry CARBON AND OTHER leaders for 4th year in a row REDUCTIONS EMPLOYEES ▪ Targeting a companywide engagement score of 76% by 2022 ▪ Named one
Slide 26: Sustainability / ESG: Disclosure and recognition
Sustainability / Environmental Social and Governance (ESG) ▪ Dow Jones Sustainability Index for 13 years in a row ▪ Over a decade of annual Sustainability reports CARBON AND OTHER ▪ Climate Report issued in 2018 analyzes 2-degree scenario REDUCTIONS ▪ Our 40% CO2 reduction goal is consistent with a
Slide 27: Other supplemental information
Other supplemental information SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS UPDATE // 27
Slide 28: Advancing our strategic vision
Advancing our strategic vision TRANSFORM THE CUSTOMER EXPERIENCE MODERNIZE THE GENERATE EXPAND NATURAL GAS ENERGY GRID CLEANER ENERGY INFRASTRUCTURE STAKEHOLDER ENGAGEMENT EMPLOYEE ENGAGEMENT AND OPERATIONAL EXCELLENCE ARE FOUNDATIONAL TO OUR SUCCESS SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS
Slide 29: Renewables projects detail
Renewables projects detail Megawatts Site Solar Wind Fuel Cell Total COD Location Regulated: Lake Placid 45 - - 45 Q4 2019 FL Trenton 74.9 - - 74.9 Q4 2019 FL DeBary 74.5 - - 74.5 Q1 2020 FL Catawba County(1) 69 - - 69 2020 NC (DEC) Gaston County(1) 25 - - 25 2020 NC (DEC) PPA projects(1)(2) 362 - -
Slide 30: North Carolina coal ash detail
North Carolina coal ash detail Site Ranking Tons of Ash State Actual/ Expected NCDEQ COAL ASH ORDER Remaining(1) Compliance Date Closure Date(5) Riverbend High - August 2019 March 2019 ▪ NC DEQ issued order April 1 requiring low Dan River High - August 2019 May 2019 priority sites be fully excavated
Slide 31: Upcoming events & other
Upcoming events & other SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS UPDATE // 31
Slide 32: Upcoming events
Upcoming events Event Date 3Q 2019 earnings call (tentative) November 8, 2019 EEI Financial Conference November 10-12, 2019 SECOND QUARTER 2019 EARNINGS REVIEW AND BUSINESS UPDATE // 32
Slide 33: Investor relations contact information
Investor relations contact information MIKE CALLAHAN, VICE PRESIDENT INVESTOR RELATIONS ▪ Michael.Callahan@duke-energy.com ▪ (704) 382-0459 CINDY LEE, DIRECTOR INVESTOR RELATIONS ▪ Cynthia.Lee@duke-energy.com ▪ (980) 373-4077 ABBY MOTSINGER, MANAGER INVESTOR RELATIONS ▪ Abby.Motsinger@duke-energy.co
Slide 34: 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 35: 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 36: Duke Energy Corporation Non-GAAP Reconciliations
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Slide 37: Adjusted Segment Income and Adjusted Other Net Loss
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Slide 38: Effective Tax Rate Including Noncontrolling Interests and Preferred Dividends
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Slide 39: Reported to Adjusted Earnings Reconciliation, Three Months Ended June
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Slide 40: Reported to Adjusted Earnings Reconciliation, Six Months Ended June
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Slide 41: Effective Tax Reconciliation
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Slide 42: Duke Energy Corporation Available Liquidity Reconciliation
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