Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q1 2016 Earnings Presentation
40 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, May 3, 2016
Slide 1: First Quarter 2016 Earnings Review // Business Update
Presented by Lynn Good, Chairman, President and CEO Steve Young, Executive VP and CFO May 3, 2016 FIRST QUARTER 2016 EARNINGS REVIEW // BUSINESS UPDATE
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 and can often be id
Slide 3: Topics for Today's Call
TOPICS FOR TODAY’S CALL Business Update Lynn Good, Chairman, President & CEO First Quarter 2016 Operational and Financial Highlights Update on Growth Initiatives Status of Portfolio Transition Financial Update Steve Young, Executive VP & CFO First Quarter 2016 Adjusted Diluted EPS Drivers
Slide 4: First Quarter 2016 Highlights
FIRST QUARTER 2016 HIGHLIGHTS 1Q 2016 Financial Update Operational performance Recognized as industry leader in safety in 2015 Achieved 1Q 2016 adjusted diluted EPS of $1.13, consistent with our plan Continued improvement in Edwardsport IGCC operational performance Lower customer volumes, mi
Slide 5: Making Progress on Growth Initiatives
MAKING PROGRESS ON GROWTH INITIATIVES Received CPCN for Western Carolinas Modernization Project New Generation Construction of Lee CC in South Carolina on- Investments time and on-budget Began construction of Citrus County CC in Florida Citrus County CC, FL 400 megawatts of commercial wind C
Slide 6: Continuing Transition Towards a More Focused Business Mix
CONTINUING TRANSITION TOWARDS A MORE FOCUSED BUSINESS MIX 2011 DukeEnergy Duke Energy& Exit of merchant Announced plans Post Transition & Progress Progress Energy Midwest Generation to acquire Energy Merge Merge 2014 textess Business 2Q 2015 text Piedmont Natural Gas 1Q 2016 25% ~100% 75% Duke Energ
Slide 7: 1Q 2016 Adjusted Diluted EPS Summary and Primary Drivers
1Q 2016 ADJUSTED DILUTED EPS SUMMARY AND PRIMARY DRIVERS Adjusted Diluted Earnings per Share Segment results vs. prior year quarter (1)(2) Core Businesses $1.24 Regulated Utilities, -$79 M (-$0.11 per share) $1.13 $1.14 $1.14 ▼ Milder winter weather ▲ Higher revenues from increased pricing and rider
Slide 8: Consistent Regulated Utilities Weather-Normal Volume Trends
CONSISTENT REGULATED UTILITIES WEATHER-NORMAL VOLUME TRENDS Residential Rolling 12 Month Retail Sales Growth (1) ~1.3% growth in average number of customers; offset by slightly lower usage per customer due to: 1.1% – Ongoing utility and customer energy efficiency efforts 0.9% 0.7% – Continued grow
Slide 9: Making Progress on Cost Management Efforts
MAKING PROGRESS ON COST MANAGEMENT EFFORTS Original 2016 O&M Assumptions (1) Cost Management Efforts ($ in billions) Absent significant storm costs, Q1 2016 O&M GAAP O&M GAAP O&M expenses declined over prior year $5.9 $6.0 Ongoing efforts to reduce costs: – Standardization of processes and $5.2
Slide 10: Key Investor Considerations
KEY INVESTOR CONSIDERATIONS Large-scale utility in the U.S. Portfolio of lower risk, with valuable geographic higher-quality diversity & competitive rates core businesses Highly defined & achievable Attractive dividend yield with long-term growth growth commitment Long-term 4 - 6%(1) Core Business
Slide 11: Appendix Materials
APPENDIX MATERIALS Item Slides Update on Key 2016 Assumptions 12-15 1Q 2016 Supplemental Data 16-19 Update on Brazil Operations 20-22 Financial Supplement 23-26 Other Information 27-29 11 | First Quarter 2016 Earnings Review and Business Update
Slide 12: Update on Key 2016 Assumptions
Update on Key 2016 Assumptions 12 | First Quarter 2016 Earnings Review and Business Update
Slide 13: Key 2016 Adjusted Earnings Guidance Assumptions
KEY 2016 ADJUSTED EARNINGS GUIDANCE ASSUMPTIONS ($ in millions) Original 2016 2016 YTD assumptions (1) (thru 3/31/2016) Adjusted segment income / (expense) (2): Regulated Utilities $3,090 $695 International Energy $210 $123 Commercial Portfolio $140 $27 Other ($265) ($68) Duke Energy Consolidated $3
Slide 14: On-Track to Achieve Guaranteed Fuel and Joint Dispatch Savings
ON-TRACK TO ACHIEVE GUARANTEED FUEL AND JOINT DISPATCH SAVINGS AHEAD OF SCHEDULE Fuel and Joint Dispatch (JDA) Savings Quarterly Savings Results ($ in millions) Guaranteed $687 million in fuel and joint $50 $700 dispatch savings to Carolinas customers $600 through mid-2017 (1) $40 $500 – Achieved cu
Slide 15: Key 2016 Earnings Sensitivities
KEY 2016 EARNINGS SENSITIVITIES Driver EPS Impact Regulated Utilities 100 bps change in earned return on equity +/- $0.40 $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 $10/barrel
Slide 16: 1Q 2016 Supplemental Data
1Q 2016 Supplemental Data 16 | First Quarter 2016 Earnings Review and Business Update
Slide 17: 1Q 2015 – 1Q 2016 Adjusted Diluted EPS Waterfall
1Q 2015 – 1Q 2016 ADJUSTED DILUTED EPS WATERFALL Favorable Sale of Regulated Commercial ASR (1) 2015 Midwest Other International Utilities Portfolio Benefit Weather Generation $1.24 ($0.10) $1.14 ($0.12) $0.02 $0.04 $1.13 ▲ Improved $1.09 $0.11 $1.07 ($0.01) $0.01 hydrology in ($0.06) Brazil ▼ 1Q$1.
Slide 18: Weather Normalized Volume Trends, by Jurisdiction
WEATHER NORMALIZED VOLUME TRENDS, BY JURISDICTION Rolling Twelve Months, as of 3/31/2016 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Regulated Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 3.4% 2.5% 1.8% 1.5% 1.6% 1.2% 1.1% 1.1% 1.1% 0.9% 0.6% 0.7% 0.7% 0.2% 0.1% 0.2% -0
Slide 19: Regulated Utilities Quarterly Weather Impacts
REGULATED UTILITIES QUARTERLY WEATHER IMPACTS Weather segment 2016 2015 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 ($10) 689 ($0.01) $110 708 $0.10
Slide 20: Update on Brazil Operations
Update on Brazil Operations 20 | First Quarter 2016 Earnings Review and Business Update
Slide 21: Brazil's Reservoir Levels – SE Region
BRAZIL’S RESERVOIR LEVELS – SE REGION 70 58.3 Reservoir Level (% Maximum Volume) 60 62.5 62.9 63.8 60.8 50.9 50 54.1 55.1 44.4 48.7 45.5 37.4 45.1 40 41.6 43.2 29.8 34.1 37.5 36.1 32.3 29.8 36.0 27.6 27.5 30 33.5 28.9 28.5 20 19.4 20.6 16.8 10 0 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20
Slide 22: Brazil Spot (PLD) Prices
BRAZIL SPOT (PLD) PRICES 450 400 388.5 388.5 388.5 388.5 387.2 372.2 350 Avg. Spot Price (R$/MWh) 300 250 240.1 202.9 200 227.0 212.3 150 145.1 100 116.1 50 35.7 30.4 37.7 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 PLD CAP 2015 2016 Increased water inflows and lower demand have reduced t
Slide 23: Financial Supplement
Financial Supplement 23 | First Quarter 2016 Earnings Review and Business Update
Slide 24: 2016 Financing Plan (as of April 30, 2016)
2016 FINANCING PLAN (AS OF APRIL 30, 2016) (1) ($ in millions) $2,000 $1,800 Represents expected CR3 $1,600 financing of ~$1.3B $1,400 $1,200 $1,000 $800 $600 $400 $200 $- Holding Duke Duke Duke Duke Duke Duke Renewables International Company Energy Energy Energy Energy Energy Energy Carolinas Progr
Slide 25: Access to Capital – 2016 Long-Term Debt Financing Activity
ACCESS TO CAPITAL – 2016 LONG-TERM DEBT FINANCING ACTIVITY Amount Credit Ratings ($ in Entity Date Issued Term Type Rate (F/M/S&P) millions) $500 DE Carolinas March 2016 AA-/Aa2/A 7 Year First Mortgage Bond Fixed – 2.500% $500 DE Carolinas March 2016 AA-/Aa2/A 30 Year First Mortgage Bond Fixed – 3.8
Slide 26: Liquidity Summary (as of March 31, 2016)
LIQUIDITY SUMMARY (AS OF MARCH 31, 2016) ($ 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) $ 3,475 $ 800 $ 1,000 $ 1,200 $ 600 $ 300 $ 125 $ 7,500 Less: Notes payable a
Slide 27: Other Information
Other Information 27 | First Quarter 2016 Earnings Review and Business Update
Slide 28: 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 Chris Bauer, Manager Investor Relations Chris.Bauer@duke-energy.com
Slide 29: Upcoming Events
UPCOMING EVENTS Event Date 2Q 2016 earnings call (tentative) August 4, 2016 3Q 2016 earnings call (tentative) November 3, 2016 29 | First Quarter 2016 Earnings Review and Business Update
Slide 30: For additional information, visit duke-energy.com/investors
For additional information on Duke Energy, please visit: www.duke-energy.com/investors
Slide 31: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations First Quarter Earnings Review & Business Update May 3, 2016 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) First Quarter Earnings Review and Business Update on May 3, 2016, include a discussion of a
Slide 32: the investment in National Methanol Company. Irrespective of whether this business is classified as
the investment in National Methanol Company. Irrespective of whether this business is classified as discontinued operations for GAAP purposes, management expects to include International Energy segment earnings within adjusted diluted EPS and adjusted segment income. Management does not expect to co
Slide 33: Business Mix Percentages
Business Mix Percentages The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 3, 2016, reference the historical approximate 75% regulated adjusted net income as a percentage of total adjusted net income (i.e. business mix) prior to the Progress Energy merger based
Slide 34: Adjusted Interest Expense
share unfavorable and $0.10 per share favorable for the three months ended March 31, 2016 and 2015, respectively. Adjusted Interest Expense The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 3, 2016, include a discussion of Duke Energy’s adjusted interest expens
Slide 35: Adjusted to Reported Earnings Reconciliation, Q1 2016
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended March 31, 2016 (Dollars in millions, except per-share amounts) Special Items Costs to Adjusted Achieve, Cost Savings Discontinued Total Reported Earnings Mergers Initiatives Operations Adjustments Earnings SEGMEN
Slide 36: Adjusted to Reported Earnings Reconciliation, Q1 2015
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended March 31, 2015 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Midwest Adjusted Progress Generation Discontinued Total Reported Earnings Merger Operations Operations Adjustments Ea
Slide 37: Adjusted to Reported Earnings Reconciliation, 2011
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2011 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Midwest Economic Adjusted Progress Edwardsport Generation Hedges (Mark- Discontinued Total Reported Earnings Merg
Slide 38: Adjusted Effective Tax Reconciliation
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Three Months Ended March 31, 2016 (Dollars in Millions) Three Months Ended March 31, 2016 Balance Effective Tax Rate Adjusted Earnings, Pretax Income $ 1,044 Costs to Achieve, Mergers (120) Cost Savings Initiatives (20) Noncontrolling int
Slide 39: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of March 31, 2016 (In millions) Cash and Cash Equivalents $ 778 Less: Certain Amounts Held in Foreign Jurisdictions (440) Less: Unavailable Domestic Cash (73) 265 Plus: Remaining Availability under Master Credit Facility 3,825 Total Avail
Slide 40: Operations, Maintenance and Other Expense
Duke Energy Corporation Operations, Maintenance and Other Expense (In millions) Years Ended Actual Forecast December 31, 2015 December 31, 2016 Operation, maintenance and other (a) $5,871 $5,960 Adjustments: Costs associated with nonregulated Midwest generation business (b) (14) – Costs to Achieve,