Duke Energy Corporation (holding Company) · NYSE:DUK

Duke Energy Corporation (holding Company) — Q1 2017 Earnings Presentation

52 slides from Duke Energy Corporation (holding Company)'s earnings presentation, May 9, 2017

  1. Slide 1: First Quarter Earnings Review and Business Update

    FIRST QUARTER EARNINGS REVIEW AND BUSINESS UPDATE May 9, 2017 PRESENTED BY: LYNN GOOD | CHAIRMAN, PRESIDENT AND CEO STEVE YOUNG | EXECUTIVE VP AND CFO

  2. 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

  3. Slide 3: Topics for today's call

    Topics for today’s call BUSINESS UPDATE Lynn Good, Chairman, President & CEO  First Quarter 2017 Financial and Operational Highlights  Our Strategic Vision Markland hydro station, Indiana  Grid Modernization  Update on Strategic Initiatives FINANCIAL UPDATE Steve Young, Executive VP & CFO Dogwoo

  4. Slide 4: First quarter 2017 financial and operational highlights

    First quarter 2017 financial and operational highlights $1.02 REPORTED DILUTED EPS FOR 1Q 2017 Financial Performance Operational Highlights COMPARED TO $1.01 IN 1Q 2016  Ongoing investments driving solid growth in electric and  Midwest LDCs received $1.04 gas utilities 2016 American Gas ADJUSTED D

  5. Slide 5: Investing in infrastructure our customers value. Delivering sustainable growth.

    INVESTING IN INFRASTRUCTURE OUR CUSTOMERS VALUE. DELIVERING SUSTAINABLE GROWTH. FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 5

  6. Slide 6: Advancing our strategic vision for the next decade

    Advancing our strategic vision for the next decade ACHIEVE TOP QUARTILE CUSTOMER SATISFACTION MODERNIZE THE GENERATE EXPAND NATURAL GAS ENERGY GRID CLEANER ENERGY INFRASTRUCTURE $25 B $11 B 15% INVESTMENTS IN INVESTMENTS IN PROPORTION OF OUR GRID MODERNIZATION CLEANER GENERATION BUSINESS MIX FROM GA

  7. Slide 7: Building a smarter energy future

    Building a smarter energy future TARGETED UNDERGROUNDING MODERNIZE THE ENERGY GRID SELF- TRANSMISSION OPTIMIZATION IMPROVEMENTS $25 B OF GRID INVESTMENTS OVER 10 YEARS DISTRIBUTION ENTERPRISE HARDENING & SYSTEM UPGRADES RESILIENCY #1 DUKE’S T&D SYSTEM IS LARGEST IN THE U.S. WITH OVER 300K LINE MILES

  8. Slide 8: Engaging stakeholders on our grid modernization plans

    Engaging stakeholders on our grid modernization plans POWER/FORWARD CAROLINAS BUILDING A BETTER WHILE GENERATING JOBS MODERNIZE THE ENERGY FUTURE FOR AND STIMULATING ENERGY GRID NORTH CAROLINA ECONOMIC GROWTH (1) PEOPLE/POWER Communication Self- Network Upgrades Optimization $0.5B $1.3B 13,907 Avera

  9. Slide 9: Making progress on our strategic initiatives

    Making progress on our strategic initiatives STATUS UPDATE  Power/Forward Carolinas Announcement  Over 2 million smart meters deployed to-date, including over 1 million in the Carolinas  Indiana grid modernization (TDSIC) underway MODERNIZE THE ENERGY GRID  W.S. Lee CCGT on track ENGAGE TRANSFOR

  10. Slide 10: 1Q 2017 Adjusted diluted EPS summary and primary drivers

    1Q 2017 Adjusted diluted EPS summary and primary drivers ADJUSTED DILUTED EARNINGS PER SHARE SEGMENT RESULTS VS. PRIOR YEAR QUARTER (1)(2) Electric Utilities & Infrastructure, -$29 M (-$0.03 per share) $1.13 ▼ Warm winter weather (-$0.14) $1.04 ▲ Lower O&M due to reduced storm restoration costs comp

  11. Slide 11: Electric utilities & infrastructure weather-normal volume trends

    Electric utilities & infrastructure weather-normal volume trends Rolling 12 Month RESIDENTIAL Retail Sales Growth  Continued strength in average customer growth (+1.4% over the rolling 12 months) partially offset by lower usage per customer 0.6% 0.2% 0.5%  New permit applications for single-family

  12. Slide 12: Moving forward with key regulatory filings

    Moving forward with key regulatory filings FILING KEY STATUS TYPE DRIVERS  Osprey rates Generation Base Rate  Osprey CCGT DUKE ENERGY effective Feb. ‘17 Adjustment acquisition FLORIDA  Hines chiller rates (GBRA)  Hines Chiller Project effective Apr. ’17 ENGAGE STAKEHOLDERS Transmission,  TDSIC-

  13. Slide 13: Our investor proposition

    Our investor proposition A SOLID LONG-TERM HOLDING 4.1% ~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 May 8, 2017 (2) 4-6

  14. Slide 14: Appendix materials

    Appendix materials Item Slide(s) Duke Energy business segment structure 15 Update on Key 2017 Assumptions 16-18 1Q 2017 Supplemental Data 19-27 Financial Supplement 28-33 Other Information 34-38 FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 14

  15. Slide 15: Duke Energy business segment structure

    Duke Energy business segment structure Duke Energy Electric Utilities Gas Utilities Commercial Other & Infrastructure & Infrastructure Renewables North and South Duke Energy Carolinas Piedmont Natural Gas Carolina North and South Commercial Duke Energy Progress Carolina Pipelines (1) Duke Energy Flo

  16. Slide 16: Update on Key 2017 Assumptions

    Update on Key 2017 Assumptions FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 16

  17. Slide 17: Key 2017 adjusted earnings guidance assumptions

    Key 2017 adjusted earnings guidance assumptions ($ in millions) Original 2017 2017 YTD assumptions (1) (thru 3/31/2017) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,109 $635 Gas Utilities & Infrastructure $282 $133 Commercial Renewables $99 $25 Other ($268) ($67) Duk

  18. Slide 18: 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

  19. Slide 19: 1Q 2017 Supplemental Data

    1Q 2017 Supplemental Data FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 19

  20. Slide 20: 1Q 2016 – 1Q 2017 adjusted diluted EPS waterfall

    1Q 2016 – 1Q 2017 adjusted diluted EPS waterfall Unfavorable Previously 1Q 2017 Electric Utilities Gas Utilities Commercial Change in Other(1) Disposed Electric & Infrastructure & Infrastructure Renewables Share Count Businesses Weather Impact Flat ($0.01) ($0.02) $0.14 $1.24 ▲ Higher earnings ▼ Hig

  21. Slide 21: 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

  22. Slide 22: Weather normalized volume trends, by electric jurisdiction

    Weather normalized volume trends, by electric jurisdiction Rolling Twelve Months, as of Mar. 31, 2017 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.2% 2.0% 1.5% 1.1% 1.0% 0.9% 0.8% 0.6% 0.5% 0.6% 0.4% 0.3% 0.2% 0.1%

  23. Slide 23: Stable-margin LDCs with strong customer growth

    Stable-margin LDCs with strong customer growth LOW VOLUMETRIC CUSTOMER MIX EXPOSURE DUE TO MOSTLY AS OF MAR. 31, 2017 FIXED MARGINS… 8% 14% Industrial EXPAND NATURAL GAS <1% INFRASTRUCTURE 78% Commercial 1.6 M 9% Residential Power Gen 90% 90% & Other <1% RESIDENTIAL Fixed Semi-fixed Volumetric CUSTO

  24. Slide 24: Enabling clean energy through midstream pipeline investments

    Enabling clean energy through midstream pipeline investments Constitution Pipeline  24% joint owner with projected investment of up to $225 million(1)  Fully subscribed; projected in service by 2H 2018 EXPAND NATURAL GAS INFRASTRUCTURE Atlantic Coast Pipeline  47% joint owner with projected inves

  25. Slide 25: Our grid modernization core categories

    Our grid modernization core categories TARGETED UNDERGROUNDING Move hard-to-access services underground to improve reliability SELF-OPTIMIZATION TRANSMISSION Add connectivity, capacity and IMPROVEMENTS control so the grid can self- Substation and transmission identify problems and react line upgrade

  26. Slide 26: Update on key regulatory activity – open dockets

    Update on key regulatory activity – open dockets Jurisdiction Regulatory Filing Docket Number Coal Ash Cost Deferral NC: E-7 Sub 1110 Duke Energy Carolinas Avoided Cost NC: E-100 Sub 148 Coal Ash Cost Deferral NC: E-2 Sub 1103 Duke Energy Progress Avoided Cost NC: E-100 Sub 148 2016 Storm Cost Defer

  27. Slide 27: Overview of state commissions by jurisdiction

    Overview of state commissions by jurisdiction North South Florida Indiana Ohio Kentucky Tennessee Carolina Carolina Number of 7 7 5 5 5 3 5 Commissioners Term 6-year terms 4-year terms 4-year terms 4-year terms 5-year terms 4-year terms 6-year terms Appointed by Appointed or Elected by the Appointed

  28. Slide 28: Financial Supplement

    Financial Supplement FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 28

  29. Slide 29: Credit metrics

    Credit metrics(1) Committed to maintaining quality, investment-grade ratings (2) FFO/Debt 31% 31% 29% 27% 26% 26% 25% 24% 21% 22% 21% 21% 21% 22% 21% 20% 20% 18% 17% 14% 14% 2015A 2016A 2017E 2015A 2016A 2017E 2015A 2016A 2017E 2015A 2016A 2017E 2015A 2016A 2017E 2015A 2016A 2017E 2015A 2016A 2017E

  30. Slide 30: 2017 financing plan (as of Apr. 30, 2017)

    2017 financing plan (as of Apr. 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 Reduction(

  31. Slide 31: 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

  32. Slide 32: Liquidity summary (as of Mar. 31, 2017)

    Liquidity summary (as of Mar. 31, 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) $ 3,400 $ 1,100 $ 1,000 $ 950 $ 600 $ 300 $ 150 $ 500 $ 8

  33. Slide 33: Amended and extended $8.0B Master Credit Facility

    Amended and extended $8.0B Master Credit Facility (MCF) in March 2017 MCF SUMMARY Lender allocations by bank Allocations by commitment level headquarters $8  Upsized the Facility from Billions $7.5 billion to $8.0 billion $7 Reset the 5-year maturity date 10 banks at $400m each $4.0   $6 to March

  34. Slide 34: Other Information

    Other Information FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 34

  35. Slide 35: Upcoming events

    Upcoming events Event Date 2017 AGA Financial Forum May 21-22, 2017 2Q 2017 earnings call (tentative) August 3, 2017 3Q 2017 earnings call (tentative) November 3, 2017 FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 35

  36. Slide 36: 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

  37. Slide 37: 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

  38. Slide 38: For additional information on Duke Energy

    For additional information on Duke Energy, please visit: www.duke-energy.com/investors FIRST QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 38

  39. Slide 39: Non-GAAP Reconciliations: Adjusted Diluted EPS

    Duke Energy Corporation Non-GAAP Reconciliations First Quarter Earnings Review & Business Update May 9, 2017 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) First Quarter Earnings Review and Business Update on May 9, 2017, include a discussion of a

  40. Slide 40: Adjusted Segment Income and Adjusted Other Net Expense

    Adjusted Segment Income and Adjusted Other Net Expense, and Forecasted Adjusted Segment Income and Forecasted Adjusted Other Net Expense The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 9, 2017, include a discussion of adjusted segment income and adjusted othe

  41. Slide 41: Holdco Debt Percentage and Available Liquidity

    Holdco Debt Percentage The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 9, 2017 include a reference to a targeted Holdco debt percentage. This percentage reflects a non-GAAP financial measure. The numerator of the Holdco debt percentage, is the balance of Duke

  42. Slide 42: Reported to adjusted earnings reconciliation, Q1 2017

    DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2017 (Dollars in millions, except per-share amounts) Special Item Reported Costs to Achieve Adjusted Earnings Piedmont Merger Earnings SEGMENT INCOME Electric Utilities and Infrastructure $ 635 $ — $ 63

  43. Slide 43: Reported to adjusted earnings reconciliation, Q1 2016

    DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2016 (Dollars in millions, except per-share amounts) Special Items Costs to Cost International Reported Achieve Savings Energy Discontinued Total Adjusted Earnings Mergers Initiatives Operations Operati

  44. Slide 44: Adjusted effective tax reconciliation

    DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Three Months Ended March 31, 2017 (Dollars in Millions) Three Months Ended March 31, 2017 Balance Effective Tax Rate Reported Income From Continuing Operations Before Income Taxes $ 1,061 Costs to Achieve Piedmont Merger 16 Noncontrolling

  45. Slide 45: Available liquidity reconciliation

    Duke Energy Corporation Available Liquidity Reconciliation As of March 31, 2017 (In millions) Cash and Cash Equivalents $ 878 Less: Certain Amounts Held in Foreign Jurisdictions (65) Less: Unavailable Domestic Cash (137) 676 Plus: Remaining Availability under Master Credit Facility 4,214 Total Avail

  46. Slide 46: FFO to Debt Calculation: Duke Energy Corporation

    FFO to Debt Calculation Duke Energy Corporation (in millions) Years Ended December 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 6,734 $ 6,798 $ 6,676 Working capital adjustment (1) 184 (345) (181) Capitalized Interest (124) (100) (98) CR3 securitization adjustment (55) (35) - Oth

  47. Slide 47: FFO to Debt Calculation: Duke Energy Carolinas

    FFO to Debt Calculation Duke Energy Carolinas (in millions) Years Ended December 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 2,556 $ 2,976 $ 2,373 Working capital adjustment (1) 88 (333) 128 Capitalized Interest (46) (38) (38) Funds From Operations 2,598 2,605 2,463 ARO spend -

  48. Slide 48: FFO to Debt Calculation: Duke Energy Progress

    FFO to Debt Calculation Duke Energy Progress (in millions) Years Ended December 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 1,305 $ 1,932 $ 1,594 Working capital adjustment (1) 106 (502) (219) Capitalized Interest (22) (17) (20) Other 3 2 2 Funds From Operations 1,392 1,415 1,35

  49. Slide 49: FFO to Debt Calculation: Duke Energy Florida

    FFO to Debt Calculation Duke Energy Florida (in millions) Years Ended December 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 1,155 $ 844 $ 1,373 Working capital adjustment (1) 3 252 (159) Capitalized Interest (27) (14) (4) CR3 securitization adjustment (55) (35) - Other 14 13 12 F

  50. Slide 50: FFO to Debt Calculation: Duke Energy Indiana

    FFO to Debt Calculation Duke Energy Indiana (in millions) Years Ended December 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 1,065 $ 871 $ 1,176 Working capital adjustment (1) (78) 132 (225) Capitalized Interest (15) (7) (6) Funds From Operations 972 996 945 ARO spend - 46 19 ARO

  51. Slide 51: FFO to Debt Calculation: Duke Energy Ohio

    FFO to Debt Calculation Duke Energy Ohio (in millions) Years Ended December 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 425 $ 425 $ 667 Working capital adjustment (1) 73 15 (91) Capitalized Interest (9) (8) (10) Funds From Operations 489 432 566 ARO spend - 5 4 ARO spend, net of

  52. Slide 52: FFO to Debt Calculation: Piedmont Natural Gas

    FFO to Debt Calculation Piedmont Natural Gas (in millions) Years Ended December 31, October 31, 2017 2016 2015 Forecast Actual Actual Cash From Operations $ 405 $ 308 $ 372 Working capital adjustment (1) 94 101 (37) Funds From Operations 499 409 335 ARO spend - 6 6 ARO spend, net of tax at 38% - 4 4

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