Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q1 2020 Earnings Presentation
45 slides from Duke Energy Corporation (holding Company)'s earnings presentation, May 12, 2020
Slide 1: Earnings Review & Business Update
Earnings Review & Business Update FIRST QUARTER 2020 Lynn Good Chair, President and CEO Steve Young Executive Vice President and CFO May 12, 2020
Slide 2: Safe Harbor statement and 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 ▪ Our community and operational response to COVID-19 ▪ Our financial response to COVID-19 ▪ Long-term company outlook FINANCIAL UPDATE Steve Young, Executive VP & CFO ▪ First-quarter 2020 earnings drivers ▪ Recent regulatory a
Slide 5: Our comprehensive response to COVID-19
Our comprehensive response to COVID-19 ▪ Implemented rotating shifts and enhanced personal protective equipment, disinfectant cleaning, temperature checks and visitor restrictions to protect critical operational staff ▪ Our focus on operational excellence has not wavered EMPLOYEES ‒ New safety proto
Slide 6: Duke Energy's business is financially resilient
Duke Energy’s business is financially resilient FUNDAMENTALLY STRONG BUSINESS MODEL… ACTIVATED 2020 ▪ Results for Q1 2020 on track with the exception of mild weather and storm activity MITIGATION PLAN ▪ Constructive regulatory environments are supportive over the long term TO SUBSTANTIALLY OFFSET EX
Slide 7: Making progress on our strategic investment pillars
Making progress on our strategic investment pillars 5-Year $56B GENERATE CLEANER ENERGY Capital Plan Remains Intact ▪ Steadfast commitment to carbon reduction goals of ≥ 50% reduction in CO2 emissions 2% from electricity generation by 2030 and net zero by 2050 3% 4% ▪ Second Duke Energy Climate Repo
Slide 8: Duke Energy has clear, distinguishing factors for shareholder value creation
Duke Energy has clear, distinguishing factors for shareholder value creation $56 B ▪ Constructive jurisdictions with strong FIVE YEAR CAPITAL PLAN economies ▪ Diversity of operations, size and scale 310 K allow us to stay nimble to drive ELECTRIC T&D MILES shareholder value ‒ O&M agility and capital
Slide 9: 1Q 2020 adjusted EPS summary and primary drivers
1Q 2020 adjusted EPS summary and primary drivers ADJUSTED EARNINGS PER SHARE SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1) Electric Utilities & Infrastructure, -$45 M (-$0.06 per share) $1.24 $1.14 ▼ Weather and storm costs (-$0.06 per share) ▼ Higher depreciation and amortization, primarily due to a gr
Slide 10: Update on key regulatory activity
Update on key regulatory activity ▪ Storm Protection Plan filed April 2020 DUKE ENERGY ▪ Multi-year rate plan and solar base rate adjustment mechanisms provide timely recovery FLORIDA of grid and clean generation investments through 2021; MYRP new rates eff. Jan. 2020 DUKE ENERGY ▪ Distribution Capi
Slide 11: Enhanced liquidity position in response to COVID-19
Enhanced liquidity position in response to COVID-19 WELL TIMED AND EXCELLENT EXECUTION OF CAPITAL MARKETS TRANSACTIONS $3B NEW DEBT ▪ Opportunistically priced $2.5 billion of common equity in November 2019 pursuant FINANCED 1Q 2020 to forward contract that can be settled anytime prior to the end of
Slide 12: Strong customer growth and retail diversification
Strong customer growth and retail diversification RESIDENTIAL ANNUAL GROWTH IN NUMBER OF RESIDENTIAL CUSTOMERS ▪ Strong customer growth continued through first quarter 2020 1.7% 1.6% ▪ Stay at home activities will increase residential sales, 1.5% 1.5% especially during summer cooling season 1.2% 1.
Slide 13: Expected COVID-19 impacts on retail volumes
Expected COVID-19 impacts on retail volumes APRIL 2020 RETAIL ELECTRIC 2020 VOLUME EXPECTATIONS VOLUMES(1) ▪ Expect declines in C&I in Q2 and Q3 with a gradual 6% April results slightly glide path towards more normal usage patterns favorable to forecast reflecting COVID ▪ Expect retail volumes to de
Slide 14: Actions underway to mitigate 2020 headwinds
Actions underway to mitigate 2020 headwinds ANTICIPATING EXPECTED EPS IMPACTS BASED ON CURRENT ASSUMPTIONS ($0.25-$0.35) ▪ ~$0.25-$0.35 impact to 2020 EPS due to retail load declines from COVID-19 pandemic COVID IMPACTS (based on current assumptions of a gradual economic recovery over the balance of
Slide 15: Focused on investor value creation
Focused on investor value creation A STRONG LONG-TERM RETURN PROPOSITION 4.6% ~8-10% 4 -6% DIVIDEND YIELD(1) zzz ATTRACTIVE HIGHLY WITH LONG-TERM RISK-ADJUSTED ACHIEVABLE DIVIDEND GROWTH TOTAL SHAREHOLDER EPS GROWTH COMMITMENT(2) RETURN(3) THROUGH 2024(4) CONSTRUCTIVE JURISDICTIONS, LOW-RISK REGULAT
Slide 16: Our focus on customer service continues to be excellent
Our focus on customer service continues to be excellent Our purpose: Power the lives of our customers and the vitality of our communities ▪ No significant safety incidents through April while delivering exceptional operational results ▪ Maintaining steadfast focus on keeping the lights on for our cu
Slide 17: Appendix
Appendix FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 17 // 17
Slide 18: Atlantic Coast Pipeline – project update
Atlantic Coast Pipeline – project update STATUS UPDATE ▪ Minimal impact expected due to COVID-19 ‒ AT – SCOTUS decision – expect by June 2020 ‒ Biological Opinion – work continues and expect permit Electric Distribution reissuance mid-2020 33% ‒ NWP 12– awaiting clarity on recent non-ACP ruling in M
Slide 19: Advancing our strategic vision
Advancing our strategic vision TRANSFORM THE CUSTOMER EXPERIENCE MODERNIZE THE GENERATE EXPAND NATURAL GAS ENERGY GRID CLEANER ENERGY INFRASTRUCTURE STAKEHOLDER ENGAGEMENT EMPLOYEE ENGAGEMENT AND OPERATIONAL EXCELLENCE ARE FOUNDATIONAL TO OUR SUCCESS FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS U
Slide 20: 2020 financial supplement
2020 financial supplement FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 20 // 20
Slide 21: Key 2020 adjusted earnings guidance assumptions
Key 2020 adjusted earnings guidance assumptions ($ in millions) Original 2020 2020 YTD Assumptions (1) (thru 3/31/2020) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,640 $705 Gas Utilities & Infrastructure $530 $249 Commercial Renewables $240 $57 Other ($540) ($187) D
Slide 22: 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 23: 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 +/- $0.15(1) Commercial +/- $0.05 Residential +/- $0.08 1% change in earned
Slide 24: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Rolling Twelve Months, as of March 31, 2020 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Utility-sponsored Energy Carolinas Progress Florida Indiana Ohio/Kentucky Utilities Efficiency (UEE) programs Earnings contribut
Slide 25: Diverse customer mix across our jurisdictions
Diverse customer mix across our jurisdictions Industrial Commercial 32% 38% Commercial Industrial 26% DEI Wholesale DEO 23% 13% Residential Majority in Residential Wholesale 37% rural, heavily 29% 2% residential areas Industrial 15% Wholesale Commercial Industrial 35% 33% 24% DEP Commercial DEC 23%
Slide 26: Renewables projects announcements
Renewables projects announcements REGULATED COMMERCIAL RENEWABLES Solar Megawatts Site Megawatts COD Location Site Solar Wind Fuel Cell Total COD Location Lake Placid 45 Dec 2019 FL Cleveland County(1) 50 - - 50 2020 NC Trenton 74.9 Dec 2019 FL Surry County(1) 23 - - 23 2020 NC Columbia 74.9 Mar 202
Slide 27: Financing plan update and current liquidity
Financing plan update and current liquidity FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 27 // 27
Slide 28: 2020 Financing plan
2020 Financing plan(1) Planned Amount Completed 2020 Issuer Security Date Issued Term Rate ($ in millions) ($ in millions) Maturities(4) Senior Notes or other LT $350 Holding Company $1,000 - $1,500 securities (excludes bank - - - - (June, 2020) loan borrowings in Q1) Common Equity $85 – ATM Holding
Slide 29: Liquidity summary (as of April 30, 2020)
Liquidity summary (as of April 30, 2020) ($ 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 $
Slide 30: Sustainability / Environmental Social and Governance (ESG)
Sustainability / Environmental Social and Governance (ESG) FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 30 // 30
Slide 31: 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 32: 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 33: Employees, customers and communities are foundational to our success
Employees, customers and communities are foundational to our success Focused on health and safety as our top priority ▪ Activated unprecedented work at home protocols for ~18,000 employees ▪ Implemented rotating shifts and enhanced personal protective equipment, CDC-approved disinfectant cleaning; t
Slide 34: Governance and transparency
Governance and transparency OTHER DISCLOSURES BOARD DIVERSITY ▪ Bloomberg ESG disclosure score of 57.4, the third-best score and in the top quartile Diverse(1) of U.S. utilities(2) (5 directors) ▪ EEI / AGA reporting template provides investors greater uniformity and consistency in reporting of ESG
Slide 35: Upcoming events & other
Upcoming events & other FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 35 // 35
Slide 36: Upcoming events
Upcoming events Event Date 2Q 2020 earnings call Early August 2020 2020 ESG Investor day Fall 2020 3Q 2020 earnings call Early November 2020 FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE //// 36 36
Slide 37: 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 FIRST QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE //// 37 37
Slide 38: For additional information on Duke Energy, please visit
For additional information on Duke Energy, please visit: duke-energy.com/investors
Slide 39: Non-GAAP Reconciliations: Adjusted Earnings per Share
Duke Energy Corporation Non-GAAP Reconciliations First Quarter Earnings Review & Business Update May 12, 2020 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) First Quarter Earnings Review and Business Update on May 12, 2020, include a discussion of adjuste
Slide 40: Adjusted segment income and adjusted other net loss
Adjusted segment income and adjusted other net loss are non-GAAP financial measures, as they represent reported segment income and other net loss adjusted for special items (as discussed above under Adjusted EPS). Management believes the presentation of adjusted segment income and adjusted other net
Slide 41: Dividend Payout Ratio
Dividend Payout Ratio The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 12, 2020, include a discussion of Duke Energy’s forecasted dividend payout ratio of 65% - 75% based upon adjusted EPS. This payout ratio is a non-GAAP financial measure as it is based upon
Slide 42: Reported to Adjusted Earnings Reconciliation
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2020 (Dollars in millions, except per-share amounts) Special Item Reported Total Adjusted Earnings Severance Adjustments Earnings SEGMENT INCOME Electric Utilities and Infrastructure $ 705 $ — $ — $ 705
Slide 43: Effective Tax Reconciliation
DUKE ENERGY CORPORATION EFFECTIVE TAX RECONCILIATION March 2020 (Dollars in millions) Three Months Ended March 31, 2020 Balance Effective Tax Rate Reported Income From Continuing Operations Before Income Taxes $ 1,027 Severance (98) Noncontrolling Interests 48 Preferred Dividends (39) Pretax Income
Slide 44: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of April 30, 2020 (In millions) Cash and Cash Equivalents $ 572 Less: Certain Amounts Held in Foreign Jurisdictions (10) Less: Unavailable Domestic Cash (129) 433 Plus: Remaining Availability under Master Credit Facilities and other facil
Slide 45: Operations, Maintenance and Other Expense
Duke Energy Corporation Operations, Maintenance and Other Expense (In millions) Original 2020 Assumptions(b) Operation, maintenance and other $ 6,061 Adjustments: Reagents Recoverable (a) (102) Energy Efficiency Recoverable (a) (424) Other Deferrals and Recoverable (a) (382) Margin based O&M for Com