Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q3 2017 Earnings Presentation
40 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Nov 3, 2017
Slide 1: Third Quarter Earnings Review and Business Update
THIRD QUARTER EARNINGS REVIEW AND BUSINESS UPDATE Nov. 3, 2017 PRESENTED BY: LYNN GOOD | CHAIRMAN, PRESIDENT AND CEO STEVE YOUNG | EXECUTIVE VP AND CFO
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 in the Appendix herein and i
Slide 3: Topics for today's call
Topics for today’s call BUSINESS UPDATE Lynn Good, Chairman, President & CEO Third quarter 2017 update Markland hydro station, Indiana Update on key regulatory activity Making progress on strategic investments FINANCIAL UPDATE Steve Young, Executive VP & CFO Dogwood solar facility, North INVES
Slide 4: Third quarter 2017 update
Third quarter 2017 update THIRD QUARTER FINANCIAL HIGHLIGHTS $1.36 REPORTED DILUTED EPS Earnings guidance narrowed to lower half of original FOR 3Q 2017 2017 EPS guidance range(1) due to weather, COMPARED TO including Hurricane Irma $1.70 IN 3Q 2016 Flexible cost management efforts expected to e
Slide 5: Constructive settlement approved in Duke Energy Florida
Constructive settlement approved in Duke Energy Florida MAJOR PROVISIONS OF THE SETTLEMENT Base Rate Adjustments Base rate increases of $67 million per year 2019-2021, primarily to recover $1 billion investments in grid modernization ENGAGE Solar Generation Base Rate Adjustment: DEF has opportun
Slide 6: Proceeding with key rate activity in North Carolina
Proceeding with key rate activity in North Carolina Duke Energy Duke Energy Progress Carolinas Retail revenue increase requested $477 M (+14.9%) $647 M (+13.6%) Return on equity requested 10.75% ENGAGE Equity component of capital structure 53% STAKEHOLDERS Proposed rate base(1) ~$8.1 B ~$13.8 B Rate
Slide 7: Making progress on our strategic investments
Making progress on our strategic investments STATUS UPDATE Announced $3 billion, 10-year Power/Forward Carolinas initiative in South Carolina New battery storage projects announced in North MODERNIZE THE Carolina and Indiana ENERGY GRID W.S. Lee CCGT, Citrus County CCGT and Western Carolinas M
Slide 8: 3Q 2017 Adjusted diluted EPS summary and primary drivers
3Q 2017 Adjusted diluted EPS summary and primary drivers ADJUSTED DILUTED SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1)(2) EARNINGS PER SHARE Electric Utilities & Infrastructure, -$85 M (-$0.12 per share) $1.68 ▼ Less favorable weather (-$0.14), including lost revenue impacts from Hurricane Irma $1.59 ▼
Slide 9: Customer growth and weather-normal electric volume trends
Customer growth and weather-normal electric volume trends Rolling 12 Month Retail RESIDENTIAL Electric Volume Growth Continued population migration into the Southeast drives ADJUSTING FOR LEAP YEAR volume growth for electric and gas utilities 0.5% RETAIL SALES INCREASED BY 0.5% Partially offset
Slide 10: Our investor proposition
Our investor proposition A SOLID LONG-TERM HOLDING 4.0% ~8-10% 4 -6% DIVIDEND YIELD(1) zzz ATTRACTIVE HIGHLY WITH DIVIDEND RISK-ADJUSTED ACHIEVABLE GROWTH TOTAL SHAREHOLDER EPS GROWTH COMMITMENT(2) RETURN(3) THROUGH 2021(4) SUPPORTED BY THE STRENGTH OF OUR BALANCE SHEET (1) As of Oct. 31, 2017 (2) 4
Slide 11: Investing in infrastructure our customers value. Delivering sustainable growth.
INVESTING IN INFRASTRUCTURE OUR CUSTOMERS VALUE. DELIVERING SUSTAINABLE GROWTH. THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 11
Slide 12: Appendix materials
Appendix materials Item Slide(s) Update on Key 2017 Assumptions 13-15 3Q 2017 Supplemental Data 16-22 Financial Supplement 23-26 Other Information 27-31 THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 12
Slide 13: Update on Key 2017 Assumptions
Update on Key 2017 Assumptions THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 13
Slide 14: Key 2017 adjusted earnings guidance assumptions
Key 2017 adjusted earnings guidance assumptions ($ in millions) Original 2017 2017 YTD assumptions (1) (thru 9/30/2017) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,109 $2,468 Gas Utilities & Infrastructure $282 $179 Commercial Renewables $99 $58 Other (3) ($268) ($1
Slide 15: Key 2017 earnings sensitivities
Key 2017 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.40 Electric Utilities & $1 billion change in rate base +/- $0.08 Infrastructure 1% change in Electric Utilities volumes +/- $0.10 1% change in earned return on equity +/- $0.04 Gas Utilities & $200 million
Slide 16: 3Q 2017 Supplemental Data
3Q 2017 Supplemental Data THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 16
Slide 17: 3Q 2016 – 3Q 2017 adjusted diluted EPS waterfall
3Q 2016 – 3Q 2017 adjusted diluted EPS waterfall Previously 3Q 2017 Electric Utilities Gas Utilities Commercial Change in Other(1) Disposed Weather Impact & Infrastructure & Infrastructure Renewables Share Count Business ($0.02) $1.68 ▼ Due to the 4Q $1.67 $0.14 2016 share ($0.08) ($0.14) $0.01 ($0.
Slide 18: YTD 2016 – YTD 2017 adjusted diluted EPS waterfall
YTD 2016 – YTD 2017 adjusted diluted EPS waterfall Previously YTD 2017 Electric Utilities Gas Utilities Commercial Change in Other(1) Disposed Weather Impact & Infrastructure & Infrastructure Renewables Share Count Business Flat $0.05 ($0.05) $0.17 ▲ Tax $3.92 planning ▼ Due to the 4Q $3.92 $3.88 ($
Slide 19: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2017 2016 income to normal: Pretax impact Weighted avg. EPS impact – Pretax impact Weighted avg. EPS impact – diluted shares favorable / shares favorable / (unfavorable) (unfavorable) First Quarter ($175) 700 ($0.15) ($10) 689 ($0.01) Seco
Slide 20: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Rolling Twelve Months, as of Sept. 30, 2017 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.1% 1.3% 1.0% 0.5% 0.5% 0.5% 0.3% 0.3% 0.0% 0.0% 0.1% 0.1% 0.1% 0.2%
Slide 21: Rate case activity and timeline
Rate case activity and timeline Evidentiary Pre-Filing Filed Rate Intervenor Duke Rebuttal Hearings Notes Notice Case Testimony Testimony Begin • Docket: E-2 Sub 1142 • Base rate case DEP May 2, 2017 June 1, 2017 Oct. 20, 2017 Nov. 6, 2017 Nov. 20, 2017 • Rates effective Feb. 1, 2018, NC if approved
Slide 22: Hurricane Irma – Duke Energy Florida response at a glance
Hurricane Irma – Duke Energy Florida response at a glance DUKE ENERGY 1,841 141 ~1.3 million FLORIDA Distribution poles Transmission Customers replaced poles replaced affected 178 >75% PROUD OF OUR Miles of wire Restored in 3 days EMPLOYEE RESPONSE replaced >99% TO ONE OF THE MOST 1,106 Restored in
Slide 23: Financial Supplement
Financial Supplement THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 23
Slide 24: 2017 financing plan (as of September 30, 2017)
2017 financing plan (as of September 30, 2017) ($ in millions) $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- Holding Duke Duke Duke Duke Duke Duke Piedmont Renewables Company Energy Energy Energy Energy Energy Energy Carolinas Progress Florida Indiana Ohio Kentucky 2017 Maturities and Debt Reduc
Slide 25: Access to capital – 2017 long-term debt financing activity
Access to capital – 2017 long-term debt financing activity Credit Ratings Amount Entity Date Issued (M/S&P, unless Term Type Rate ($ in millions) otherwise noted) $650 DE Florida January 2017 A1/A 10 Year First Mortgage Bond Fixed – 3.200% $250 DE Florida January 2017 A1/A 3 Year First Mortgage Bond
Slide 26: Liquidity summary (as of September 30, 2017)
Liquidity summary (as of September 30, 2017) ($ 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) $ 2,850 $ 1,350 $ 1,250 $ 1,000 $ 600 $ 300 $ 150 $
Slide 27: Other Information
Other Information THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 27
Slide 28: Upcoming events
Upcoming events Event Date EEI Financial Conference November 5-7, 2017 4Q 2017 earnings call (tentative) February 15, 2018 THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 28
Slide 29: 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 THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 29
Slide 30: Safe Harbor statement
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 o
Slide 31: For additional information on Duke Energy, please visit
For additional information on Duke Energy, please visit: www.duke-energy.com/investors THIRD QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 31
Slide 32: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Third Quarter Earnings Review & Business Update November 3, 2017 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Third Quarter Earnings Review and Business Update on November 3, 2017, include a discu
Slide 33: Adjusted Diluted EPS Guidance
Adjusted Diluted EPS Guidance The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 3, 2017, include a reference to the original forecasted 2017 adjusted diluted EPS guidance range of $4.50 - $4.70 per share and the narrowed forecasted 2017 adjusted diluted EP
Slide 34: 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 3, 2017 include a discussion of the adjusted ETR for the quarter and year-to-date periods ended September 30, 2017. The materials also include a discussion of the 2017 fore
Slide 35: Reported to adjusted earnings reconciliation – Three months ended Sept. 30, 2017
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2017 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve Commercial Reported Piedmont Florida Renewables Discontinued Total Adjusted Earnings Merger Settlement Impairments
Slide 36: Reported to adjusted earnings reconciliation – Nine months ended Sept. 30, 2017
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2017 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve Commercial Reported Piedmont Florida Renewables Discontinued Total Adjusted Earnings Merger Settlement Impairments
Slide 37: Reported to adjusted earnings reconciliation – Three months ended Sept. 30, 2016
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2016 (Dollars in millions, except per-share amounts) Special Items Costs to Cost Commercial International Reported Achieve Savings Renewables Energy Discontinued Total Adjusted Earnings Mergers Init
Slide 38: Reported to adjusted earnings reconciliation – Nine months ended Sept. 30, 2016
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2016 (Dollars in millions, except per-share amounts) Special Items Costs to Cost Commercial International Reported Achieve Savings Renewables Energy Discontinued Total Adjusted Earnings Mergers Initi
Slide 39: Adjusted effective tax reconciliation
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION September 2017 (Dollars in Millions) Three Months Ended Nine Months Ended September 30, 2017 September 30, 2017 Balance Effective Tax Rate Balance Effective Tax Rate Reported Income From Continuing Operations Before Income Taxes $ 1,321 $
Slide 40: Available liquidity reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2017 (In millions) Cash and Cash Equivalents $ 282 Less: Certain Amounts Held in Foreign Jurisdictions (7) Less: Unavailable Domestic Cash (77) 198 Plus: Remaining Availability under Master Credit Facilities and other fac