Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q2 2015 Earnings Presentation
45 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Aug 6, 2015
Slide 1: Earnings Review and Business Update
Earnings Review and Business Update August 6, 2015 | Second Quarter 2015 Lynn Good, President and CEO | Steve Young, Executive VP and CFO
Slide 2: Safe Harbor
Safe Harbor 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 t
Slide 3: Topics for today's call
Topics for today’s call Business Update (Lynn Good, President & CEO) Second Quarter Financial Highlights Operational Achievements Update on Strategic Initiatives Financial Update (Steve Young, CFO) Second Quarter Adjusted Diluted EPS Drivers Status of 2015 Earnings Guidance Range Economi
Slide 4: Second quarter 2015 highlights
Second quarter 2015 highlights 2Q 2015 Financial Update 2Q 2015 Operational Highlights Achieved 2Q 2015 adjusted diluted EPS of Met high demand during June heatwave $0.95, consistent with our internal plan Monthly record natural gas burn of 25 BCF in Regulated and Commercial businesses June
Slide 5: Making progress with strategic initiatives
Making progress with strategic initiatives New Generation Investments Infrastructure Investments Environmental Compliance Completed $1.25 billion Announced Sabal Trail Making significant progress to NCEMPA Asset Purchase Pipeline (7.5% ownership, develop and implement long- Announced $1.1 bi
Slide 6: 2Q 2015 earnings summary and key drivers
2Q 2015 earnings summary and key drivers Adjusted diluted EPS Segment results vs. prior year quarter(1) Regulated Utilities (-$0.09 per share) ▼ Higher O&M, including nuclear outage cost levelization ▼ Higher depreciation and amortization expense ▼ Higher effective tax rate due to prior year state t
Slide 7: Status of 2015 earnings guidance range
Status of 2015 earnings guidance range 2015 Earnings Update Adjusted Diluted EPS YTD adjusted diluted EPS of $2.20 through 2Q 2015 is consistent with our plan $4.55 - $4.75 – Strong earnings in the Regulated Utilities and the sale of Midwest Generation offsets weakness at International Expect 2H
Slide 8: Second quarter weather-normal retail volume trends improving
Second quarter weather-normal retail volume trends improving Residential Rolling 12 Month Retail Sales Growth ~1.3% growth in average number of customers; offset by lower usage per customer due to: +1.3% – Changes in customer behavior including energy efficiency and +0.3% conservation +0.1% – Stro
Slide 9: Update on coal ash retirement obligations and expenditures
Update on coal ash retirement obligations and expenditures Asset Retirement Obligation (ARO) In September 2014, North Carolina enacted the Coal Ash Management Act of 2014 (CAMA) – Recognized ~$3.5 billion ARO for estimated obligations to close North Carolina basins On April 17, 2015, U.S. EPA pu
Slide 10: Update on conditions in Brazil
Update on conditions in Brazil Factors Impacting Results 2015 Financial Results Low reservoir conditions YTD through 2Q 2015, International’s o Reservoir levels have improved during 2015 earnings have declined by 26 cents per but remain at low levels share compared to 2014 o Expect thermal to co
Slide 11: Financial objectives
Financial objectives Current year Long-term Balance Dividend earnings earnings sheet growth guidance growth strength – Achieve 2015 earnings – Target earnings per – Continue growing – Maintain strong, per share within share growth of the dividend within investment-grade guidance range of 4 - 6% (1)(
Slide 12: Appendix materials
Appendix materials Item Slides 2Q 2015 Supplemental Data 13 - 18 Regulatory Proceedings 19 – 21 Update on International Operations 22 – 25 Financial Supplement 26 – 30 Other Information 31 - 34 12 | Second Quarter 2015 Earnings Review and Business Update
Slide 13: 2Q 2015 Supplemental Data
2Q 2015 Supplemental Data 13 | Second Quarter 2015 Earnings Review and Business Update
Slide 14: Key 2015 adjusted earnings guidance assumptions
Key 2015 adjusted earnings guidance assumptions ($ in millions) Original 2015 2015 YTD assumptions (1) (through 6/30/2015) Adjusted segment income / (expense) (2): Regulated Utilities $2,950 $1,406 International Energy $345 $88 Commercial Portfolio $185 $103 Other ($220) ($58) 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* +/- $0.02 - 0.03
Slide 16: Weather normalized volume trends, by jurisdiction
Weather normalized volume trends, by jurisdiction Rolling Twelve Months, as of 6/30/2015 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Regulated Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.7% 2.3% 1.6% 1.3% 1.3% 0.8% 0.5% 0.6% 0.3% 0.4% 0.3% 0.3% 0.1% 0.1% -0.2% -0.4%
Slide 17: 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 $0.09 Sec
Slide 18: Fuel and Joint Dispatch savings update
Fuel and Joint Dispatch savings update Fuel and Joint Dispatch (JDA) Savings Quarterly Savings Results ($ 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 ~$520 million $30 through 2Q 2015 $
Slide 19: Regulatory Proceedings
Regulatory Proceedings 19 | Second Quarter 2015 Earnings Review and Business Update
Slide 20: Major pending regulatory proceedings
Major pending regulatory proceedings Entity Filing Docket Status Intervener Staff Filing Evidentiary Expected number filings Hearings Order Indiana IGCC-11 43114-IGCC 11 Fully briefed, awaiting Oct. 31, 2013 Oct. 31, 2013 Dec. 17, 2013 3Q 2015 order Indiana IGCC-12 43114-IGCC 12 Post hearing briefs
Slide 21: Edwardsport IGCC rider summary
Edwardsport IGCC rider summary Six-Month Revenue Tracker Costs Through (1) Rates Effective Status Requirement IGCC-1 Feb. 2008 Jan. 2009 Approved $ 8 million IGCC-2 Sept. 2008 May 2009 Approved $ 17 million IGCC-3 Mar. 2009 Dec. 2009 Approved $ 27 million IGCC-4 Sept. 2009 July 2010 Approved $ 49 mi
Slide 22: Update on International Operations
Update on International Operations 22 | Second 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 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 levels ar
Slide 24: 2015 rainfall – Southeast Brazil (% of Long Term Average)
2015 rainfall – Southeast Brazil (% of Long Term Average) 24 | Second Quarter 2015 Earnings Review and Business Update
Slide 25: Duke Energy International – National Methanol Company (NMC)
Duke Energy International – National Methanol Company (NMC) Background – NMC is a producer of methanol and MTBE in Saudi Arabia – Current ownership: Saudi Basic Industries Corporation (SABIC) - 50%, Celanese - 25%, and Duke Energy - 25% – JV agreement extended to 2032 (effective April 1, 2010) – U
Slide 26: Financial Supplement
Financial Supplement 26 | Second Quarter 2015 Earnings Review and Business Update
Slide 27: 2015 financing plan (as of August 6, 2015)
2015 financing plan (as of August 6, 2015) (1) ($ in millions) $1,800 $1,600 $1,400 Changes to 2015 Financing Plan since 1Q 2015: − Added issuances of $600m each at the Holding Company and $1,200 DE Progress to fund $1.25 billion NCEMPA acquisition that closed on July 31, 2015 $1,000 $800 $600 $400
Slide 28: Access to capital – 2015 long-term debt financing activity
Access to capital – 2015 long-term debt financing activity Amount Credit Ratings ($ 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% $1.2 billion of International cash was repatriated to the U.S. in June 2015, pr
Slide 29: Liquidity summary (as of June 30, 2015)
Liquidity summary (as of June 30, 2015) ($ 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) $ 3,200 $ 1,200 $ 1,000 $ 900 $ 600 $ 475 $ 125 $ 7,500 Less: Notes payable an
Slide 30: Credit ratings (as of August 6, 2015)
Credit ratings (as of August 6, 2015) Holding companies Operating companies Fitch Moody's S&P Fitch Moody's S&P DUKE ENERGY Stable Negative Stable DUKE ENERGY CAROLINAS Stable Stable Stable Corporate Credit / Issuer Rating BBB+ A3 A- Senior Secured Debt AA- Aa2 A Senior Unsecured Debt BBB+ A3 BBB+ S
Slide 31: Other Information
Other Information 31 | Second Quarter 2015 Earnings Review and Business Update
Slide 32: Moving toward a lower carbon footprint and increased fuel diversity
Moving toward a lower carbon footprint and increased fuel diversity Total Company Fuel Diversity (MWh output)(1) 2006(2) Coal 2014 2020 (Est.) 4% Nuclear Natural Gas/Oil 9% Hydro, Wind & Solar 8% 12% 26% 24% 33% 40% 27% 63% 26% 28% Reduction of U.S. Generation Emissions Total Company Carbon Intensit
Slide 33: 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 34: Upcoming events
Upcoming events Event Date 3Q 2015 earnings call (tentative) November 5 EEI Financial Conference (Hollywood, FL) November 8-10 34 | Second Quarter 2015 Earnings Review and Business Update
Slide 35: For additional information on Duke Energy, please visit
For additional information on Duke Energy, please visit: www.duke-energy.com/investors
Slide 36: Non-GAAP Reconciliations: Adjusted Diluted EPS
Duke Energy Corporation Non-GAAP Reconciliations Second Quarter Earnings Review & Business Update August 6, 2015 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Second Quarter Earnings Review and Business Update on August 6, 2015 include a discussi
Slide 37: Non-GAAP Reconciliations: Adjusted diluted EPS growth
annual growth rate (CAGR) basis). Adjusted diluted EPS is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in
Slide 38: Adjusted Effective Tax Rate (ETR)
Adjusted Effective Tax Rate (ETR) The materials for Duke Energy’s Second Quarter Earnings Review and Business Update on August 6, 2015 include a discussion of the adjusted ETR for the year-to-date period ended June 30, 2015. The materials also include a discussion of the 2015 forecasted adjusted ETR
Slide 39: Adjusted to Reported Earnings Reconciliation, Three Months Ended June 30, 2015
DUKE ENERGY CORPORTATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended June 30, 2015 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Adjusted Progress Discontinued Total Reported Earnings Merger Operations Adjustments Earnings SEGMENT INCOME Regulate
Slide 40: Adjusted to Reported Earnings Reconciliation, Six Months Ended June 30, 2015
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Six Months Ended June 30, 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 Earni
Slide 41: Adjusted to Reported Earnings Reconciliation, Three Months Ended June 30, 2014
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended June 30, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Midwest Hedges Adjusted Progress Generation (Mark-to- Discontinued Total Reported Earnings Merger Operations
Slide 42: Adjusted to Reported Earnings Reconciliation, Six Months Ended June 30, 2014
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Six Months Ended June 30, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Midwest Midwest Hedges Adjusted Progress Generation Generation (Mark-to- Discontinued Total Reported Earnings M
Slide 43: Adjusted Effective Tax Reconciliation, 2015
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Three and Six Months Ended June 30, 2015 (Dollars in Millions) Three Months Ended Six Months Ended June 30, 2015 June 30, 2015 Balance Effective Tax Rate Balance Effective Tax Rate Adjusted Earnings, Pre-Tax Income* $ 962 $ 2,272 Costs to
Slide 44: Adjusted Effective Tax Reconciliation, 2014
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Three and Six Months Ended June 30, 2014 (Dollars in Millions) Three Months Ended Six Months Ended June 30, 2014 June 30, 2014 Balance Effective Tax Rate Balance Effective Tax Rate Adjusted Earnings, Pre-Tax Income* $ 1,101 $ 2,354 Costs
Slide 45: Available Liquidity Reconciliation as of June 30, 2015
Duke Energy Corporation Available Liquidity Reconciliation As of June 30, 2015 (In millions) Cash and Cash Equivalents $ 960 Less: Certain Amounts Held in Foreign Jurisdictions (446) Less: Unavailable Domestic Cash (57) 457 Plus: Remaining Availability under Master Credit Facility 5,224 Total Availa