Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q3 2020 Earnings Presentation
49 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Nov 5, 2020
Slide 1: Earnings Review & Business Update
Earnings Review & Business Update THIRD QUARTER 2020 Lynn Good Chair, President and CEO Steve Young Executive Vice President and CFO November 5, 2020
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 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 ▪ 2020 financial overview ▪ ESG Day key messages ▪ Stakeholder engagement updates FINANCIAL UPDATE Steve Young, Executive VP & CFO ▪ Third-quarter 2020 earnings drivers ▪ Load growth and economic update ▪ 2020 financial commit
Slide 5: Third quarter update and key ESG Day messages
Third quarter update and key ESG Day messages DELIVERING ON 2020 FINANCIAL COMMITMENTS $1.74/$1.87 3Q 2020 REPORTED/ ▪ Solid Q3 results driven by growth at the electric utilities and strong mitigation ADJUSTED EPS ▪ Confident in ability to deliver within original guidance range for 2020 COMPARED TO
Slide 6: Momentum continues on clean energy transition
Momentum continues on clean energy transition NORTH CAROLINA ✓ Reached settlements with solar industry on interconnection queue reform in September ▪ Expect Clean Energy Plan report to the Governor by December ▪ Expect IRP hearings in Q2 2021 SOUTH Electric CAROLINA ✓ EV infrastructure pilot Distrib
Slide 7: Premium franchises poised to benefit from ESG transition
Premium franchises poised to benefit from ESG transition SCALE OWNER OF PREMIUM UTILITIES ▪ Duke Energy is the largest regulated utility in North America 53 GWS by rate base, electric customers and total assets TOTAL GENERATING CAPACITY ▪ Operate premium utilities in 7 states across the country, ben
Slide 8: 3Q 2020 adjusted EPS summary and primary drivers
3Q 2020 adjusted EPS summary and primary drivers SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1) ADJUSTED Electric Utilities & Infrastructure, +$46 M (+$0.06 per share(2)) EARNINGS PER SHARE ▲ O&M mitigation efforts (+$0.08 per share) ▲ Contribution from base rate changes in NC, IN, FL and KY (+$0.07 per
Slide 9: 3Q retail electric volumes and full year expectations
3Q retail electric volumes and full year expectations 3Q 2020 RETAIL ELECTRIC VOLUMES(1) 3Q expectations were a 3Q 2020 VOLUME TRENDS 4% total retail decline of ▪ 3Q 2020 load results slightly favorable to original COVID- ~3.5% 19 forecast shared in May ‒ 3Q20 impact versus Feb. budget of ($0.08) EP
Slide 10: Delivering on 2020 financial commitments
Delivering on 2020 financial commitments ▪ Confident in our ability to deliver in the narrowed 2020 EPS guidance range of $5.05-$5.20(1) 2020 MITIGATION(2) ‒ COVID-19 impacts of ($0.25-$0.35) EPS forecasted for the full $ in millions year $450 ‒ ACP cancellation results in loss of ($0.13) EPS in sec
Slide 11: 2021 earnings growth drivers
2021 earnings growth drivers 2021 PRIMARY GROWTH DRIVERS Electric Utilities & Infrastructure Gas Utilities & Infrastructure ▲ Florida multi-year rate plan and Solar BRA ▲ Piedmont TN rate case and annual SC Electric RSA filings ▲ Rate case activityDistribution to recover and earn on investments: 38%
Slide 12: Clean energy transition drives significant growth
Clean energy transition drives significant growth Growing 5-year capex …leads to higher …with ability to mitigate profile… earnings base growth… customer rate impacts... ✓ Fuel savings ✓ Lower O&M than coal plants Electric $140B - Distribution $65B - ✓ Efficiencies from $150B 38% $75B technology/dig
Slide 13: Our investor value proposition
Our investor value proposition A STRONG LONG-TERM RETURN PROPOSITION 4.1% ~10% 4 -6% LONG-TERM DIVIDEND YIELD(1) zzz ATTRACTIVE EPS GROWTH(4) WITH LONG-TERM RISK-ADJUSTED EXPECT TO ACHIEVE DIVIDEND GROWTH TOTAL SHAREHOLDER TOP END THROUGH 2024 COMMITMENT(2) RETURN(3) CONSTRUCTIVE JURISDICTIONS, LOWE
Slide 14: Appendix
Appendix THIRD QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 14 // 14
Slide 15: 2020 financial supplement
2020 financial supplement THIRD QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 15 // 15
Slide 16: Key 2020 adjusted earnings guidance assumptions
Key 2020 adjusted earnings guidance assumptions ($ in millions) Original 2020 2020 YTD Assumptions (1) (thru 9/30/2020) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,640 $2,870 Gas Utilities & Infrastructure $530 $291 Commercial Renewables $240 $207 Other ($540) ($374
Slide 17: 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 18: 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 (2) +/- $0.15(1) (2) Commercial +/- $0.05 (2) Residential +/- $0.08 (2) 1% c
Slide 19: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities Year to date, as of September 30, 2020 5.7% 4.3% 3.7% 2.5% 2.7% 1.4% 1.9% -1.1% -3.0% -2.5% -2.9% -2.8% -4.9% -5.
Slide 20: Robust capital plan drives long-term shareholder value
Robust capital plan drives long-term shareholder value $58 BILLION CAPITAL PLAN ▪ $58 billion capital plan drives shareholder value (2020 – 2024) creation through 2024 ▪ Clean energy transition and robust customer growth ~20% Clean Electric drive significant capital needs: ~5% Energy capex(2) Distri
Slide 21: Financing plan update and current liquidity
Financing plan update and current liquidity THIRD QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 21 // 21
Slide 22: Our focus on a strong balance sheet
Our focus on a strong balance sheet KEY MESSAGES ▪ Joint DEC and DEP Financing petition filed in NC on Oct. 26 to securitize storm costs ‒ ~$750 million for DEP and ~$230 million for DEC ‒ Expect financing orders to be issued mid-2021 ▪ Received remaining refundable AMT credits and interest of $592
Slide 23: 2020 Financing plan
2020 Financing plan(1) Planned Amount Completed 2020 Issuer Security Date Issued Term Rate ($ in millions) ($ in millions) Maturities(5) Common Equity Holding Company $500 (2) $392 YTD - - - (ATM/DRIP) $500 May 2020 10-Year 2.45% Senior Notes or other LT $350 Holding Company $1,000 - $1,500 securiti
Slide 24: Liquidity summary (as of September 30, 2020)
Liquidity summary (as of September 30, 2020) ($ 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 $ 1,475 $ 1,250 $ 800 $ 600 $ 450 $ 175 $ 60
Slide 25: Sustainability / Environmental Social and Governance (ESG)
Sustainability / Environmental Social and Governance (ESG) THIRD QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 25 // 25
Slide 26: Road to Net-Zero
Road to Net-Zero Where we’ve been Where we’re going (2005 – 2019) (2020 & beyond) Double Increased renewables, storage and new technologies renewable energy portfolio in the next Retire all 5 years coal-only units in the 6,500 Carolinas by At least 50% 2030 CO2 reduction by megawatts 2030(1) Net-zer
Slide 27: National leader in low carbon intensity energy
National leader in low carbon intensity energy Carbon Intensity Benchmarks and Duke Energy Projections Carbon Intensity [lbs./MWh] 2018 Benchmarking Air Emissions Duke Energy - MJ Bradley Projections Source: 2018 Benchmarking Air Emissions by MJ Bradley Carbon intensity rate of combined DEC/DEP flee
Slide 28: Duke Energy contemplates the largest coal closure in the industry over the next decade
Duke Energy contemplates the largest coal closure in the industry over the next decade Planned coal retirements by 2030(1) Coal remaining post 2030 2019 active coal nameplate capacity and planned retirements by 2030 (GW) 20 DUK planned retirements in addition to 6.5 GW XCEL out of coal retired betwe
Slide 29: IRP portfolio results – Carolinas combined
IRP portfolio results – Carolinas combined Base with Earliest 70% CO2 70% CO2 Base without No New Gas Carbon Practicable Coal Reduction: Reduction: Carbon Policy Generation Policy Retirements High Wind High SMR Pathway A B C D E F System CO2 Reduction 56% 53% 59% 62% 64% 64% 70% 73% 71% 74% 65% 73%
Slide 30: Serving the Carolinas' winter peak
Solar generation Serving the Carolinas' winter peak Load Carolinas California Winter Peaking Summer Peaking Solar not Solar more aligned with Winter Solar closely aligned winter peak output highly with summer variable peak – storage can be used to shift energy to evening hours Source: CAISO Solar +
Slide 31: Clean energy future drives infrastructure growth opportunity in Carolinas
Clean energy future drives infrastructure growth opportunity in Carolinas Carolinas IRP- related infrastructure needs(1) – irrespective of ownership Carbon Reduction Infrastructure investment (% vs. 2005 level) ($ billion) $50B Avg. Base portfolio includes ~9 GW renewables / storage additions 55% -
Slide 32: Grid investments support fleet transformation across all jurisdictions
Grid investments support fleet transformation across all jurisdictions Grid capital plan significantly trending up in second half of the decade Transmission ▪ Transmission investments total ~$7B in current five-year plan. Improvements Significant incremental capital over the next decade for transmis
Slide 33: Significant renewable energy investments delivering cleaner energy
Significant renewable energy investments delivering cleaner energy Renewables will be Duke Energy’s largest source of energy by 2050 Projected to add upwards of 40,000 MWs of new renewables, making up 40% of our generation mix Commercial Renewables Regulated and non-regulated renewable capacity(1):
Slide 34: Duke is an industry leader in carbon-free generation
Duke is an industry leader in carbon-free generation The Carolinas’ utilities rank second among large, regulated utilities with 53% of generation from carbon-free resources(1), driven by… ▪ Best in class nuclear fleet ▪ North Carolina ranked 2nd in the nation for solar development Duke is less “coal
Slide 35: Fostering a culture rooted in social responsibility, strong governance and innovating for the future
Fostering a culture rooted in social responsibility, strong governance and innovating for the future Strong ESG rankings Employees Diversity and Inclusion Stakeholders Leading employer for Over 400 D&I-related Ongoing engagement in diversity, women and conversations with employees in Carolinas IRPs,
Slide 36: Piedmont acquisition has been a tremendous success
Piedmont acquisition has been a tremendous success SIGNIFICANT GROWTH IN RATE BASE … WHILE CUSTOMER RATES AND CUSTOMER SATISFACTION… AND EMISSIONS TREND DOWN $1.23 $5.7 ~2% Avg Customer Rate Rate Base 15% reduction ($B) $3.2 CAGR $1.16 2016 2020E 2016 2019 772 Satisfaction Scores Methane Emissions 4
Slide 37: Upcoming events & other
Upcoming events & other THIRD QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE // 37 // 37
Slide 38: Upcoming events
Upcoming events Event Date EEI Financial Conference November 9-11, 2020 4Q 2020 earnings call (tentative) February 11, 2021 THIRD QUARTER 2020 EARNINGS REVIEW AND BUSINESS UPDATE //// 38 38
Slide 39: 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 ABBY MOTSINGER, MANAGER INVESTOR RELATIONS ▪ Abby.Motsinger@duke-energy.com ▪
Slide 40: 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 41: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Third Quarter Earnings Review & Business Update November 5, 2020 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Third Quarter Earnings Review and Business Update on November 5, 2020, include a discussion of
Slide 42: Adjusted Segment Income (Loss) and Adjusted Other Net Loss
Adjusted Segment Income (Loss) and Adjusted Other Net Loss The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 5, 2020, include a discussion of adjusted segment income (loss) and adjusted other net loss for the quarter and year-to- date periods ended Septemb
Slide 43: Available Liquidity
Available Liquidity The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 5, 2020, include a discussion of Duke Energy’s available liquidity balance. The available liquidity balance presented is a non-GAAP financial measure as it represents cash and cash equiv
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Slide 49: Available Liquidity Reconciliation As of September 30, 2020
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2020 (In millions) Cash and Cash Equivalents $ 308 Less: Certain Amounts Held in Foreign Jurisdictions (12) Less: Unavailable Domestic Cash (68) 228 Plus: Remaining Availability under Master Credit Facilities and other fa