Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q3 2015 Earnings Presentation
46 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Nov 5, 2015
Slide 1: Earnings Review and Business Update
Earnings Review and Business Update November 5, 2015 | Third Quarter 2015 Lynn Good, President and CEO | Steve Young, Executive VP and CFO
Slide 2: Safe Harbor
Safe Harbor 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. These forward-look
Slide 3: Topics for today's call
Topics for today’s call Business Update (Lynn Good, President & CEO) Third Quarter Highlights Transition to Core Regulated Business Mix Strategic Growth Projects Update Financial Update (Steve Young, CFO) Third Quarter Adjusted Diluted EPS Drivers Economic Conditions & Customer Volumes I
Slide 4: Third Quarter 2015 Highlights
3Q 2015 Highlights Sutton Combined Cycle Plant Third Quarter 2015 Highlights Part of Duke Energy’s growing gas generation fleet On Track to Achieved 3Q 2015 adjusted diluted EPS of $1.47 Achieve Narrowing our 2015 adjusted diluted EPS guidance Financial range to $4.55 - $4.65 per share Objective
Slide 5: Transitioning the business towards a higher regulated business mix
Strategic focus on increasing our regulated business mix Duke Energy & Exit of merchant Progress Energy Midwest Generation Merge 2014 Business 4Q 2015 Transitioning the business towards a higher regulated business mix 2012 Duke Energy enters 1Q 2015 Announced plans to FERC regulated acquire Piedmont
Slide 6: Long-term growth initiatives continue to progress
Long-term growth initiatives continue to progress Began construction at Lee CC in South Carolina Citrus County CC in FL to begin pre-construction New Generation activities later this year Investments Western Carolinas Modernization Project updated to (~$8 B) (1) reflect stakeholder input Acq
Slide 7: 3Q 2015 earnings summary and key drivers
3Q 2015 earnings summary and key drivers Adjusted diluted EPS Segment results vs. prior year quarter(1) Regulated Utilities (+$0.07 per share) ▲ Favorable weather and increased wholesale sales margins (including NCEMPA) ▲ Increased rider recovery, including energy efficiency ▼ Higher O&M expenses du
Slide 8: Consistent retail load growth through the third quarter
Consistent retail load growth through the third quarter Residential Rolling 12 Month Retail Sales Growth Strong new customer growth of 1.3% over the rolling 12 +1.1% month period Usage per customer has remained flat for two consecutive quarters +0.4% +0.3% Continued improvement in employment,
Slide 9: A look ahead towards 2016
A look ahead towards 2016 Adjusted Diluted EPS Considerations for 2016 Regulated Normal weather – 2015 is expected to have above Utilities normal weather (+$0.17 EPS through 3Q 2015) Capital investments (rider recovery and AFUDC) Full year impact of NCEMPA asset purchase Continued modest gro
Slide 10: Core businesses positioned for continued strong growth
Core businesses positioned for continued strong growth Total Company International (Adjusted Diluted EPS) (Adjusted Diluted EPS) $4.55 $4.55 - $4.65 (1) $4.32 $0.60 $0.61 $4.13 $0.30 $3.72 $3.86 (3) 2013 2014 [A] 2015 [E] Decline in International’s earnings from 2013 to 2015 due to: Weak hydrology
Slide 11: Financial objectives
Financial objectives Current year Long-term Balance Dividend earnings earnings sheet growth guidance growth strength – Narrowed our 2015 – Base for long-term – Dividend growth – Maintain strong, earnings guidance range EPS growth to be consistent with long- investment-grade to $4.55 - $4.65(1) per r
Slide 12: Appendix materials
Appendix materials Item Slides 3Q 2015 Supplemental Data 13 – 21 Update on International Operations 22 – 26 Financial Supplement 27 – 31 Other Information 32 – 33 12 | Third Quarter 2015 Earnings Review and Business Update
Slide 13: 3Q 2015 Supplemental Data
3Q 2015 Supplemental Data 13 | Third Quarter 2015 Earnings Review and Business Update
Slide 14: Key 2015 adjusted earnings guidance assumptions
Key 2015 adjusted earnings guidance assumptions ($ in millions) Original 2015 2015 YTD assumptions (1) (through 9/30/2015) Adjusted segment income / (expense) (2): Regulated Utilities $2,950 $2,371 International Energy $345 $157 Commercial Portfolio $185 $99 Other ($220) ($77) Duke Energy Consolidat
Slide 15: Key 2015 earnings sensitivities
Key 2015 earnings sensitivities Driver Full-Year EPS Impact Regulated 100 bps change in earned return on equity +/- $0.40 Utilities $1 billion change in rate base +/- $0.08 1% change in Regulated Utilities volumes +/- $0.10 International 10% change in BRL/US$ foreign exchange rate* +/- $0.01 - 0.02
Slide 16: Foreign currency sensitivity ranges
Foreign currency sensitivity ranges BRL 300 Translated to US$ $0.45 $0.32 Per $0.40 Share $0.35 A 10% change in foreign currency $0.24 per exchange rate has a smaller EPS impact as $0.30 Share the rate continues to increase EPS in US$(1) $0.25 $0.20 $0.15 $0.08 per $0.06 per Share Share $0.10 $0.05
Slide 17: Weather normalized volume trends, by jurisdiction
Weather normalized volume trends, by jurisdiction Rolling Twelve Months, as of 9/30/2015 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Regulated Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.3% 1.4% 1.3% 1.1% 0.7% 0.6% 0.5% 0.5% 0.4% 0.3% 0.3% 0.3% 0.1% 0.0% 0.1% 0.0% 0.
Slide 18: Regulated Utilities quarterly weather impacts
Regulated Utilities quarterly weather impacts Weather segment 2015 2014 income to normal: Pretax impact Weighted avg. EPS impact – Pretax impact Weighted avg. EPS impact – diluted shares favorable / diluted shares favorable / (unfavorable) (unfavorable) First Quarter 110 708 $0.10 $100 706 $0.09 Sec
Slide 19: On-track to achieve guaranteed fuel and joint dispatch savings
On-track to achieve guaranteed fuel and joint dispatch savings Fuel and Joint Dispatch (JDA) Savings Quarterly Savings Results ($ in millions) Guaranteed $687 million in fuel and joint $50 $600 dispatch savings to Carolinas customers over $500 $40 5 years (1) $400 – Cumulative savings of ~$560 milli
Slide 20: Edwardsport settlement with key consumer groups
Edwardsport settlement with key consumer groups Settles all open regulatory proceedings before the commission; – IGCC 11 through IGCC 15 – FAC 99 sub-docket & amounts approved subject to refund Settlement is subject to approval by the IURC; a decision is expected in 1H2016 Major settlement ter
Slide 21: Duke Energy's accounting for renewable tax credits
Duke Energy’s accounting for renewable tax credits Investment Tax Credits High level ITC example Current ITC available is 30 percent for wind and Project Cost $500 million solar projects 30% ITC Cash Benefit $150 million ITCs will reduce to 10 percent in 2017 for solar Life of Asset 20 Years onl
Slide 22: Update on International Operations
Update on International Operations 22 | Third Quarter 2015 Earnings Review and Business Update
Slide 23: Brazil's reservoir levels – SE region
Brazil’s reservoir levels – SE region 90 80 Reservoir Level (% Maximum Volume) 70 60 50 43.2 40.3 38.8 37.4 37.4 40 34.6 36.3 36.3 34.3 32.4 36.0 36.1 30 33.5 34.4 30.3 25.3 28.5 19.4 20 16.0 19.4 20.6 18.7 16.8 10 0 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2001 2012 2014 2015 Reservoir
Slide 24: 2015 rainfall – Southeast Brazil
2015 rainfall – Southeast Brazil (% of Long Term Average) 24 | Third Quarter 2015 Earnings Review and Business Update
Slide 25: Historical and forecasted PLD pricing in Brazil
Historical and forecasted PLD pricing in Brazil 900 800 700 600 500 $R 400 300 200 100 0 January February March April May June July August September October November December 2014 2015 Forecast Increased water inflows and lower demand has reduced the PLD in 2H 2015 below the governments cap of $R 38
Slide 26: External websites to track conditions in Brazil
External websites to track conditions in Brazil Reservoir Levels o Duke Energy’s hydro assets are located in the Southeast region of Brazil. This region holds around 70% of Brazil’s hydro generation capacity and population density. PLD week ahead energy pricing o Duke Energy sells energy into th
Slide 27: Financial Supplement
Financial Supplement 27 | Third Quarter 2015 Earnings Review and Business Update
Slide 28: 2015 financing plan (as of November 5, 2015)
2015 financing plan (as of November 5, 2015) (1) ($ in millions) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- Holding Duke Duke Duke Duke Duke Duke Renewables International Company Energy Energy Energy Energy Energy Energy Carolinas Progress (2) Florida (2) Indiana Ohio (2) Kentucky 2015 Matur
Slide 29: Access to capital – 2015 long-term debt financing activity
Access to capital – 2015 long-term debt financing activity Amount Credit Ratings ($ in Entity Date Issued Term Type Rate (M/S&P/F) millions) $500 DE Carolinas March 2015 Aa2/A/A+ 30 Year First Mortgage Bond Fixed – 3.75% $500 DE Progress August 2015 Aa2/A/A+ 10 Year First Mortgage Bond Fixed – 3.25%
Slide 30: Liquidity summary (as of September 30, 2015)
Liquidity summary (as of September 30, 2015) ($ in millions) Duke Duke Duke Duke Duke Duke Duke Energy Energy Energy Energy Energy Energy Energy Carolinas Progress Florida Indiana Ohio Kentucky Total Master Credit Facility (1) $ 3,300 $ 800 $ 1,300 $ 1,200 $ 500 $ 300 $ 100 $ 7,500 Less: Notes payab
Slide 31: Credit ratings (as of November 5, 2015)
Credit ratings (as of November 5, 2015) Holding companies Operating companies Fitch Moody's S&P Fitch Moody's S&P DUKE ENERGY Watch-N Watch-N Negative DUKE ENERGY CAROLINAS Stable Stable Negative Senior Unsecured Debt BBB+ A3 BBB+ Senior Secured Debt AA- Aa2 A Commercial Paper F-2 P-2 A-2 Senior Uns
Slide 32: Investor Relations app
Investor Relations app Free mobile app for Investor Relations materials now available for iPhone, iPad, and Android mobile devices The Duke Energy app provides mobile access to commonly used IR materials, including: – SEC Filings – Earnings Materials – Company Presentations – Press Releases Se
Slide 33: Upcoming events
Upcoming events Event Date EEI Financial Conference November 8-10 4Q 2015 earnings call (tentative) February 18, 2016 33 | Third Quarter 2015 Earnings Review and Business Update
Slide 34: For additional information on Duke Energy, please visit
For additional information on Duke Energy, please visit: www.duke-energy.com/investors
Slide 35: Non-GAAP Reconciliations: Adjusted Diluted EPS
Duke Energy Corporation Non-GAAP Reconciliations Third Quarter Earnings Review & Business Update November 5, 2015 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Third Quarter Earnings Review and Business Update on November 5, 2015 include a discus
Slide 36: Adjusted Diluted EPS Outlook
Adjusted Diluted EPS Outlook The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 5, 2015 include a reference to the original forecasted 2013 adjusted diluted EPS guidance range of $4.20 - $4.45 per share including International Energy’s approximate expected
Slide 37: 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 5, 2015 include a discussion of the adjusted ETR for the year-to-date period ended September 30, 2015. The materials also include a discussion of the 2015 forecasted adjust
Slide 38: Adjusted diluted EPS definition and incentive bonuses
used as a basis for employee incentive bonuses. The most directly comparable GAAP measure for adjusted diluted EPS is reported diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, which includes the impact of special items, mark-to-market impacts of eco
Slide 39: Adjusted to Reported Earnings Reconciliation, Three Months Ended Sept 30, 2015
DUKE ENERGY CORPORTATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended September 30, 2015 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Hedges Adjusted Progress Edwardsport Ash Basin (Mark-to- Discontinued Total Reported Earnings Merger Se
Slide 40: Adjusted to Reported Earnings Reconciliation, Nine Months Ended Sept 30, 2015
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2015 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Midwest Hedges Adjusted Progress Edwardsport Generation Ash Basin (Mark-to- Discontinued Total Reported E
Slide 41: Adjusted to Reported Earnings Reconciliation, Three Months Ended Sept 30, 2014
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended September 30, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Midwest Adjusted Progress Generation Discontinued Total Reported Earnings Merger Operations Asset Sales Operation
Slide 42: Adjusted to Reported Earnings Reconciliation, Nine Months Ended Sept 30, 2014
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Midwest Hedges Adjusted Progress Asset Generation Asset (Mark-to- Discontinued Total Reported Earnings Me
Slide 43: Adjusted to Reported Earnings Reconciliation, Twelve Months Ended Dec 31, 2014
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Midwest International Hedges Adjusted Progress Asset Generation Litigation Asset Tax (Mark-to- Discontin
Slide 44: Adjusted Effective Tax Reconciliation, 2015
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Three and Nine Months Ended September 30, 2015 (Dollars in Millions) Three Months Ended Nine Months Ended September 30, 2015 September 30, 2015 Balance Effective Tax Rate Balance Effective Tax Rate Adjusted Earnings, Pre-Tax Income* $ 1,4
Slide 45: Adjusted Effective Tax Reconciliation, 2014
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Three and Nine Months Ended September 30, 2014 (Dollars in Millions) Three Months Ended Nine Months Ended September 30, 2014 September 30, 2014 Balance Effective Tax Rate Balance Effective Tax Rate Adjusted Earnings, Pre-Tax Income* $ 1,4
Slide 46: Available Liquidity Reconciliation as of September 30, 2015
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2015 (In millions) Cash and Cash Equivalents $ 1,370 Less: Certain Amounts Held in Foreign Jurisdictions (480) Less: Unavailable Domestic Cash (50) 840 Plus: Remaining Availability under Master Credit Facility 5,019 Total