Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q3 2021 Earnings Presentation
44 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Nov 4, 2021
Slide 1: Q3 2021 Earnings Review and Business Update
Q3 / 2021 UPDATE EARNINGS REVIEW AND BUSINESS Lynn Good / Chair, President and CEO Steve Young / Executive Vice President and CFO November 4, 2021 // 1
Slide 2: Safe Harbor statement / Regulation G disclosure
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: Financial highlights
Financial highlights $1.79 / $1.88 Q3 2021 REPORTED / ADJUSTED EPS RESULTS DRIVEN BY CONTINUED STRENGTH IN ELECTRIC UTILITIES $5.15 - $5.30 NARROWING 2021 ADJUSTED EPS GUIDANCE RANGE 5% – 7% REAFFIRMING GROWTH RATE THROUGH 2025 OFF 2021 MIDPOINT OF $5.15(1) (1) Based on adjusted EPS THIRD QUARTER 20
Slide 5: North Carolina enacts comprehensive clean energy legislation
North Carolina enacts comprehensive clean energy legislation Growing capital plan to support energy transition ▪ Supports a 70% carbon reduction target by 2030 and net zero by 2050 ▪ NCUC to approve a Carbon Reduction Plan by ADVANCES $65B - December 2022 (including stakeholder input) $75B CARBON RE
Slide 6: Making progress on our 2020 ESG Day commitments
Making progress on our 2020 ESG Day commitments 2020 ESG DAY GOALS PROGRESS TO DATE ✓ Exceeded 40% carbon reduction from 2005 in 2020 Carbon Reduction ✓ Legislative, regulatory, and investment plans are on track to meet or exceed 50% reduction by 2030 ENVIRONMENTAL ✓ 54 coal units retired since 2010
Slide 7: Regulatory and policy update
Regulatory and policy update NEAR-TERM INITIATIVES ▪ Filed South Carolina modified IRP in August, ruling expected by year end Carolinas ▪ Held technical conference in North Carolina IRP in September, order expected by year end ▪ Announced four solar projects under Clean Florida Energy Connection pro
Slide 8: Q3 2021 EPS summary and primary drivers
Q3 2021 EPS summary and primary drivers REPORTED SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1) ($0.13) EARNINGS PER SHARE $0.47 Electric Utilities & Infrastructure, +$77 M (+$0.10 per share)(2) $4.00 ▲ Retail electric volumes ▲ Contribution from base rate changes $5.12 ▲ $5.12Riders and other margin $1.
Slide 9: Retail electric volumes
Retail electric volumes Q3 2021 RETAIL ELECTRIC VOLUMES(1) Q3 2021 RETAIL LOAD TRENDS 11.7% 11.8% ▪ Residential customer growth remains strong, particularly in the Southeast 7.2% ‒ Usage per customer beginning to normalize 5.3% 6.5% as workers return to offices 3.4% ▪ Retail and dining, leisure and
Slide 10: 2022 earnings growth drivers
2022 earnings growth drivers 2022 PRIMARY GROWTH DRIVERS Electric Utilities & Infrastructure ▲ Load and customer growth ▲ Florida multi-year rate plan, SOBRA and SPP rider ▲ Carolinas grid improvement plans ▲ Ohio electric distribution case (effective summer 2022) ▲ Midwest grid investment riders $5
Slide 11: Our investor value proposition
Our investor value proposition A STRONG LONG-TERM RETURN PROPOSITION 3.9% ~10% 5 -7% DIVIDEND YIELD(1) ATTRACTIVE zzz LONG-TERM WITH LONG-TERM RISK-ADJUSTED EPS GROWTH(4) DIVIDEND GROWTH TOTAL SHAREHOLDER THROUGH 2025 COMMITMENT(2) RETURN(3) CONSTRUCTIVE JURISDICTIONS, LOWER-RISK REGULATED INVESTMEN
Slide 12: Appendix
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Slide 13: IRP update
IRP update ▪ Process: North Carolina Utilities Commission (NCUC) typically does not “approve” the IRPs; rather, after a formal docket review with intervenors, the NCUC will “accept” the IRPs as reasonable for planning purposes (or reject some aspects of the IRP or make recommendations for future IRP
Slide 14: North Carolina subcritical coal generation
North Carolina subcritical coal generation(1) NC CLEAN ENERGY LEGISLATION PROVIDES FOR THE SECURITIZATION OF 50% OF THE BALANCE OF SUBCRITICAL COAL GENERATION AT RETIREMENT ▪ Rulemaking to be completed within 180 days of HB 951 becoming law (by April 11, 2022) Annual Net Book Value Depreciation Earl
Slide 15: Coal as a percentage of earnings base
Coal as a percentage of earnings base 14% 9% 7% 5% 2 -3% ~1% 2020A 2025E 2029E Total Coal Earnings Base Excluding Dual Fuel Coal assets reduced by half over the 5-year plan and near-zero by 2030 THIRD QUARTER 2021 EARNINGS REVIEW AND BUSINESS UPDATE //// 15 15
Slide 16: Long-standing history of strong governance driven from diverse Board of Directors
Long-standing history of strong governance driven from diverse Board of Directors FOCUSED ON BOARD COMPOSITION TO OVERSEE THE COMPANY’S LONG-TERM STRATEGY ▪ 9 out of 13 directors were first appointed in the last five years(1) ▪ 12 out of 13 directors are independent (all directors except Chair, Pres
Slide 17: Cost management continues to be a core competency
Cost management continues to be a core competency Sustained savings across all jurisdictions Favorable O&M metrics benefit our customers ▪ Lowered electric utility O&M by $450 million ▪ Rank #2 across various operating metrics since 2016, while growing earnings base $20 billion ▪ O&M efficiency keep
Slide 18: Capital plan focused on clean energy transition
Capital plan focused on clean energy transition Growing 5-year capex ~5% profile… …to support our path to net-zero LDC emissions by 2050(1) ~10% (20%) (>40%) (at least 50%) $65B - Million short tons of CO2 153 153 $60B - $75B $58B $59B $65B 109 109 83 83 LDC Gas 10% Net0zero 2020 – 2024 2021 – 2025
Slide 19: Transmission and distribution investments shaping our grid modernization
Transmission and distribution investments shaping our grid modernization INVESTING OVER $30 BILLION TO MODERNIZE OUR GRID ▪ Enables connectivity of clean energy resources ▪ Improves reliability and resiliency, including storm hardening ▪ Includes targeted investments that support state economic deve
Slide 20: Operational excellence on behalf of our customers
Operational excellence on behalf of our customers SAFETY ▪ Duke Energy was an industry leader for the sixth year in a row - Total incident case rate (TICR) of 0.33 in 2020 ▪ TICR nearly 50% lower (better) than 2013 levels, the first full year after the Progress merger NUCLEAR PERFORMANCE ▪ 22nd cons
Slide 21: 2021 guidance supplemental information
2021 guidance supplemental information // 21
Slide 22: Key 2021 adjusted earnings guidance assumptions
Key 2021 adjusted earnings guidance assumptions ($ in millions) Original 2021 2021 YTD Assumptions (1) (thru 9/30/2021) Adjusted segment income/ (expense) (2): Electric Utilities & Infrastructure $3,900 $3,244 Gas Utilities & Infrastructure $415 $274 Commercial Renewables $220 $152 Other ($575) ($37
Slide 23: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2021 2020 income to normal: Pretax Weighted EPS impact Pretax Weighted EPS impact impact avg. shares favorable / impact avg. shares favorable / (unfavorable) (unfavorable) First Quarter ($17) 769 ($0.02) ($110) 734 ($0.11) Second Quarter $
Slide 24: Key 2021 earnings sensitivities
Key 2021 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.55 $1 billion change in rate base +/- $0.06 Electric Utilities & Infrastructure 1% change in retail volumes: Industrial +/- $0.02 (2) +/- $0.15(1) (2) Commercial +/- $0.05 (2) Residential +/- $0.08 (2) 1% c
Slide 25: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities Rolling Twelve Months, as of September 30, 2021 6.7% 4.8% 4.4% 4.3% 3.6% 3.2% 2.6% 2.5% 2.4% 1.8% 2.0% 1.9% 2.2%
Slide 26: Financing plan update and current liquidity
Financing plan update and current liquidity // 26
Slide 27: 2021 Financing plan
2021 Financing plan(1) Estimated / Completed 2021 Issuer Actual Amount Security Date Issued Term Rate ($ in millions) Maturities(2) ($ in millions) $500 2-year Floating $1,000 10-year Fixed – 2.55% $1,750 $3,000 Senior Notes June 2021 $750 20-year Fixed – 3.30% (May & Sept.) Holding Company $750 30-
Slide 28: Liquidity summary (as of September 30, 2021)
Liquidity summary (as of September 30, 2021) ($ 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 $ 1,275 $ 1,150 $ 850 $ 600 $ 600 $ 175 $ 70
Slide 29: Upcoming Events & Other
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Slide 30: Upcoming events
Upcoming events Event Date EEI Financial Conference November 7-9, 2021 4Q 2021 earnings call (tentative) February 10, 2022 ESG Analyst Day 2022 THIRD QUARTER 2021 EARNINGS REVIEW AND BUSINESS UPDATE //// 30 30
Slide 31: Investor relations contact information
Investor relations contact information JACK SULLIVAN, VICE PRESIDENT INVESTOR RELATIONS ▪ Jack.Sullivan@duke-energy.com ▪ (980) 373-3564 CHRIS JACOBI, DIRECTOR INVESTOR RELATIONS ▪ Christopher.Jacobi@duke-energy.com ▪ (704) 382-8397 LINDA MILLER, MANAGER INVESTOR RELATIONS ▪ Linda.Miller@duke-energy
Slide 32: For additional information on Duke Energy, please visit duke-energy.com/investors
For additional information on Duke Energy, please visit: duke-energy.com/investors THIRD QUARTER 2021 EARNINGS REVIEW AND BUSINESS UPDATE //// 32 32
Slide 33: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Third Quarter Earnings Review & Business Update November 4, 2021 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of
Slide 34: Adjusted EPS Guidance
Adjusted EPS Guidance The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 4, 2021, include a reference to the forecasted 2021 adjusted EPS guidance range of $5.15 to $5.30 per share, narrowed from $5.00 to $5.30 per share during the third quarter of 2021. In
Slide 35: Effective Tax Rate Including Noncontrolling Interests and Preferred Dividends
Effective Tax Rate Including Impacts of Noncontrolling Interests and Preferred Dividends and Excluding Special Items The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of the effective tax rate including impacts of noncontrolli
Slide 36: Reported to Adjusted Earnings Reconciliation, Three Months Ended September 30, 2021
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2021 (Dollars in millions, except per share amounts) Special Items Workplace and Reported Gas Pipeline Workforce Regulatory Total Adjusted Earnings Investments Realignment Settlements Adjustments Ea
Slide 37: Reported to Adjusted Earnings Reconciliation, Nine Months Ended September 30, 2021
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2021 (Dollars in millions, except per share amounts) Special Items Workplace and Reported Gas Pipeline Workforce Regulatory Total Adjusted Earnings Investments Realignment Settlements Adjustments Ear
Slide 38: Reported to Adjusted Earnings Reconciliation, Three Months Ended September 30, 2020
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2020 (Dollars in millions, except per share amounts) Special Items Reported Gas Pipeline Regulatory Total Adjusted Earnings Investments Settlements Adjustments Earnings SEGMENT INCOME (LOSS) Electri
Slide 39: Reported to Adjusted Earnings Reconciliation, Nine Months Ended September 30, 2020
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2020 (Dollars in millions, except per share amounts) Special Items Reported Gas Pipeline Regulatory Total Adjusted Earnings Investments Severance Settlements Adjustments Earnings SEGMENT INCOME (LOSS
Slide 40: Effective Tax Reconciliation, September 2021
DUKE ENERGY CORPORATION EFFECTIVE TAX RECONCILIATION September 2021 (Dollars in millions) Three Months Ended Nine Months Ended September 30, 2021 September 30, 2021 Effective Tax Effective Tax Balance Rate Balance Rate Reported Income Before Income Taxes $ 1,366 $ 3,125 Gas Pipeline Investments (3)
Slide 41: Duke Energy - Carolinas Jurisdictions Operations, Maintenance and Other Expense
Duke Energy - Carolinas Jurisdictions Operations, Maintenance and Other Expense (In millions) Actual Forecast(e) December 31, 2016 December 31, 2021 Operation, maintenance and other(a) - Duke Energy Carolinas $2,158 $1,801 (a) Operation, maintenance and other - Duke Energy Progress 1,565 1,447 Adjus
Slide 42: Duke Energy - Florida Operations, Maintenance and Other Expense
Duke Energy - Florida Operations, Maintenance and Other Expense (In millions) Actual Forecast(e) December 31, 2016 December 31, 2021 Operation, maintenance and other(a) - Duke Energy Florida $884 $1,016 Adjustments: Costs to Achieve, Mergers(b) (9) – Severance(b) (17) – Energy Efficiency Recoverable
Slide 43: Duke Energy - Midwest Jurisdictions Operations, Maintenance and Other Expense
Duke Energy - Midwest Jurisdictions Operations, Maintenance and Other Expense (In millions) Actual Forecast(e) December 31, 2016 December 31, 2021 Operation, maintenance and other(a) - Duke Energy Indiana $727 $782 (a) Operation, maintenance and other - Duke Energy Ohio 514 471 Adjustments: Costs to
Slide 44: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2021 (In millions) Cash and Cash Equivalents $ 548 Less: Certain Amounts Held in Foreign Jurisdictions (5) Less: Unavailable Domestic Cash (78) 465 Plus: Remaining Availability under Master Credit Facilities and other fac