Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q2 2010 Earnings Presentation
38 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Aug 3, 2010
Slide 1: Second Quarter Earnings Review and Business Update
SECOND QUARTER Earnings Review and Business Update August 3, 2010 Jim Rogers Chairman, President and Chief Executive Officer Lynn Good Group Executive and Chief Financial Officer
Slide 2: Safe Harbor Statement
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 the additiona
Slide 3: Increasing Full-Year Earnings Outlook
INCREASING FULL-YEAR EARNINGS OUTLOOK Adjusted Diluted EPS 2010 Status +30% Increasing earnings +31% outlook range to $0.70 $1.30 - $1.35 EPS* $0.54 $0.34 Increase primarily due to: $0.26 1) Favorable weather 2) Increased weather-normalized retail sales volumes Q2 '09 Q2 '10 YTD '09 YTD '10 * Based
Slide 4: 2Q 2010 Earnings Summary and Drivers
2Q 2010 EARNINGS SUMMARY AND DRIVERS USFE&G Adjusted Segment EBIT Drivers Adjusted Segment EBIT (in millions) 2Q10 2Q09 ▲ Increased revenues from ‘09 Carolinas rate cases – $70M US Franchised Electric and Gas (USFE&G) $ 671 $ 500 ▲ Favorable weather – $56M ▲ Increased AFUDC – $20M Commercial Power 8
Slide 5: Improvement in Normalized Volume Trends – USFE&G
IMPROVEMENT IN NORMALIZED VOLUME TRENDS – USFE&G Residential Commercial Change vs. Prior-Year Quarter Change vs. Prior-Year Quarter 0.1% 1.5% 1.7% 1.3% 0.6% 0.1% -0.4% -0.9% -1.1% -0.9% 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10 Industrial USFE&G Total Change vs. Prior-Year Quarter Change vs.
Slide 6: Ohio Competitive Environment Update
OHIO COMPETITIVE ENVIRONMENT UPDATE Monthly Sales Volumes (GWh) DE Retail Sales Successfully Executes Its Strategy 2,000 as Customer Switching Continues in Ohio 1,600 1,200 Switching (as of June 30, 2010) DE Retail Sales (Outside DE Ohio • ~56% gross switching 800 territory) DE Retail Sales (DE • ~2
Slide 7: Positioning Beyond 2011 in Ohio
POSITIONING BEYOND 2011 IN OHIO DE Ohio – Evaluating Strategic Options Post-2011 Negotiated ESP ESP With Auction Market Rate Offer ► DE Ohio is evaluating various strategic options - expect an initial filing by end of 2010 ► Considerations with post-2011 ESP structure > Objective to earn a fair retu
Slide 8: Continued Focus on Cost Control Efforts
CONTINUED FOCUS ON COST CONTROL EFFORTS Adjusted O&M Costs (1) 2010 Status ($ in millions) Thru Q2 2010, on-track to 1,800 achieve O&M costs(1) flat $1.65 B $1.65 B to 2009 1,700 • Modest cost pressure expected during 1,600 remainder of 2010 due to higher generation levels 1,500 1,400 Voluntary Sepa
Slide 9: Update on Major Construction Projects
UPDATE ON MAJOR CONSTRUCTION PROJECTS Cliffside USFE&G Major Construction Projects1 • 825 MW advanced clean-coal unit expected in-service in 2012 $1,080 • Project is ~70% complete and on budget $900 Edwardsport $1,800 $1,500 • 618 MW IGCC facility expected in-service in 2012 $425 $535 • Revised cost
Slide 10: Our Commitments to Investors
OUR COMMITMENTS TO INVESTORS Commitments Short-Term Actions Long-Term Goals • Increasing 2010 adjusted diluted EPS range from • Achieve adjusted diluted EPS CAGR of 4-6% Grow Earnings $1.25 – $1.30 to $1.30 - $1.35 off a 2009 base and Dividends • Increased quarterly cash dividend by ½ cent/share • C
Slide 11: Appendix
APPENDIX Second Quarter Earnings Review and Business Update August 3, 2010
Slide 12: Update on Key Assumptions for 2010
UPDATE ON KEY ASSUMPTIONS FOR 2010 ($ in Millions) 2010 FY 2010 YTD Assumptions (thru 6/30/10) USFE&G Adjusted Segment EBIT $2,630 $1,415 Commercial Power Adjusted Segment EBIT $315 $189 International Adjusted Segment EBIT $485 $266 Other Adjusted Net Expense $255 $110 Interest Expense $850 $422 Deb
Slide 13: US Franchised Electric and Gas
US FRANCHISED ELECTRIC AND GAS Reported & Adjusted Segment EBIT 2Q10 2Q09 YTD 2010 YTD 2009 ($ in Millions) Reported Segment EBIT $ 671 $ 500 $ 1,415 $ 1,057 Adjustments -- -- -- -- Adjusted Segment EBIT $ 671 $ 500 $ 1,415 $ 1,057 Quarter-over-Quarter Drivers USFE&G Adjusted Segment EBIT Adjusted s
Slide 14: Economic Signals Are Mixed
ECONOMIC SIGNALS ARE MIXED Housing - Stabilized but still at historical lows Manufacturing – Improving, sustainable? 6,000 ISM Purchasing Managers' Index DE Carolinas DE Carolinas Total Single-Family Bldg Permits 5,000 6-month moving average 65 U.S. Index 60 4,000 55 3,000 50 45 2,000 40 35 1,000 30
Slide 15: Industrial Volume Quarterly Trends
INDUSTRIAL VOLUME QUARTERLY TRENDS Q1 Q2 Q3 Q4 Primary Metals (Billed GwH) Textiles (Billed GwH) 1,500 1,500 1,000 1,000 500 500 0 0 2008 2009 2010 2008 2009 2010 (Billed GwH) Chemicals (Billed GwH) Total Industrial 1,500 12,000 9,000 1,000 6,000 500 3,000 0 0 2008 2009 2010 2008 2009 2010 Note: The
Slide 16: Maintain Focus on Operational Performance
MAINTAIN FOCUS ON OPERATIONAL PERFORMANCE Nuclear Generation Capacity Factor Fossil Generation Commercial Availability 100% 100% 90% 90% 80% 80% 70% 70% Q12010 Q22010 Q32010 Q42010 Q12010 Q22010 Q32010 Q42010 2010 Year-End Target Actual 2010 Year-End Target Actual Nuclear Total Operating Cost – $/MW
Slide 17: USFE&G Quarterly Weather Impacts
USFE&G QUARTERLY WEATHER IMPACTS ($ in Millions) Weather EBIT to Normal: 2010 2009 First Quarter $ 60 $ 10 Second Quarter $ 80 $ 20 Third Quarter $(40) Fourth Quarter $ 10 Full Year $ -- * Favorable/(Unfavorable) Key Weather Data (2Q2010) ►Carolinas experienced the warmest June on record ►Cooling De
Slide 18: Upcoming Regulatory Calendar – Key Filings
UPCOMING REGULATORY CALENDAR – KEY FILINGS IGCC CWIP Rider 5 – Indiana • Docket: 43114 – IGCC 5 • Key Dates: • August 2nd – Prehearing conference • August 20th – OUCC and intevenor testimony due • September 24th – Duke rebuttal testimony due • October 7th or 8th – Evidentiary hearing IGCC Cost Updat
Slide 19: Commercial Power
COMMERCIAL POWER Reported & Adjusted Segment EBIT 2Q10 2Q09 YTD 2010 YTD 2009 ($ in Millions) Reported Segment EBIT $ (604) $ 79 $ (475) $ 193 Adjustments 693 36 664 25 Adjusted Segment EBIT $ 89 $ 115 $ 189 $ 218 Quarter-over-Quarter Drivers Adjusted segment EBIT decreased primarily due to: (in mil
Slide 20: 2013/14 PJM Auction Results
2013/14 PJM AUCTION RESULTS Midwest gas-fired assets receiving auction price 3,200 200 MW-day 3,100 175 Capacity Price per MW 3,000 150 125 2,900 MW 100 2,800 75 2,700 50 2,600 25 2,500 0 '10 / '11 '11 / '12 '12 / '13 '13 / '14 Planning Year Auctions Duke MW's Price 2013/2014 Auction Results: • 3,01
Slide 21: International
INTERNATIONAL Reported & Adjusted Segment EBIT ($ in Millions) 2Q10 2Q09 YTD 2010 YTD 2009 Reported Segment EBIT $ 126 $ 68 $ 266 $ 161 Adjustments -- 26 -- 26 Adjusted Segment EBIT $ 126 $ 94 $ 266 $ 187 International Adjusted Segment Quarter-over-Quarter Drivers (in millions) EBIT Adjusted segment
Slide 22: Other
OTHER Reported & Adjusted Net Expense 2Q10 2Q09 YTD 2010 YTD 2009 ($ in Millions) Reported Net Expense $ 122 $ 38 $ 268 $ 128 Adjustments (83) (1) (158) (41) Adjusted Net Expense $ 39 $ 37 $ 110 $ 87 Other Adjusted Net Expense 2010 Adjustments: (in millions) • $76 million voluntary separation and of
Slide 23: Pending Environmental Regulations to Impact Coal Generation
PENDING ENVIRONMENTAL REGULATIONS TO IMPACT COAL GENERATION Proposed Regulations Potential Regulations Coal Combustion Residuals (CCR) – “Coal Ash” Air Pollutants Regulation by EPA > New rule proposed in May 2010 > Maximum Achievable Control Technology (MACT) rule > Final rules expected in late 2011
Slide 24: Liquidity
LIQUIDITY Liquidity (as of June 30, 2010) ($ in millions) Duke DE DE DE DE Energy Carolinas Ohio Indiana Kentucky Total (1) Master Credit Facility $ 1,097 $ 840 $ 650 $ 450 $ 100 $ 3,137 (2) Regional Bank Credit Facility 100 100 - - - 200 (3) Less: Notes Payable and Commercial Paper - (300) - (150)
Slide 25: YTD Financings
YTD FINANCINGS 2010 Long-Term Debt Financings (through July 31, 2010) ($ in millions) Date Issuer Security Amount March Duke Energy 3.35% Unsecured due 4/2015 $ 450 April Duke Energy Regional Bank Credit Facility Borrowing $ 75 May DEGS Green Frontier 15-year Term Loan (1) 325 June Duke Energy Carol
Slide 26: Increasing the Dividend
INCREASING THE DIVIDEND Indicative Annual Dividend Rate as of Year-end (Amounts in $ per share) $1.50 Spectra Energy Projected $1.24 $1.28 Spin-Off $1.10 $1.10 $1.10 $1.10 $1.10 $1.10 $0.92 $0.96 $0.98 $1.00 $0.88 $0.50 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E > June 2010 - in
Slide 27: Upcoming Activities
UPCOMING ACTIVITIES Event Date Third Quarter 2010 Earnings Call October 28th 11:00 a.m. EEI Financial Conference October 31st – November 3rd Analyst Day/Fourth Quarter 2010 Earnings TBD 27 Second Quarter Earnings Review and Business Update August 3, 2010
Slide 28: Second Quarter Earnings Review and Business Update August 3, 2010
Second Quarter Earnings Review and Business Update August 3, 2010 28
Slide 29: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Second Quarter Earnings Review and Business Update August 3, 2010 Adjusted Diluted Earnings per Share (“EPS”) The materials for Duke Energy Corporation’s (“Duke Energy”) Second Quarter Earnings Review and Business Update on August 3, 2010 include a di
Slide 30: Adjusted Segment EBIT and Other Net Expenses
Adjusted Segment EBIT and Other Net Expenses for 2009 and 2010 and Forecasted Adjusted Segment EBIT and Other Net Expenses for 2010 The materials for Duke Energy’s Second Quarter Earnings Review and Business Update on August 3, 2010 include a discussion of adjusted segment EBIT and Other net expense
Slide 31: Ohio Customer Switching Impacts to Diluted EPS
Ohio Customer Switching Impacts to Diluted Earnings per Share The materials for Duke Energy’s Second Quarter Earnings Review and Business Update on August 3, 2010 include a discussion of the fact that the Midwest Generation component of the Commercial Power segment has had certain customers switch a
Slide 32: Adjusted to Reported Earnings Reconciliation June 2009 QTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION June 2009 Quarter-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) Crescent Costs to Related Economic Achieve, Guarantees International Hedges Adjusted Cinergy and Tax Transmission (Mark-to- Discontinu
Slide 33: Adjusted to Reported Earnings Reconciliation June 2009 YTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION June 2009 Year-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) Crescent Costs to Related Economic Achieve, Guarantees International Hedges Adjusted Cinergy and Tax Transmission (Mark-to- Discontinued
Slide 34: Adjusted to Reported Earnings Reconciliation June 2010 QTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION June 2010 Quarter-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) Voluntary Costs to Opportunity Economic Achieve, Plan/Office Goodwill and Hedges Adjusted Cinergy Consolidation Other (Mark-to- Discon
Slide 35: Adjusted to Reported Earnings Reconciliation June 2010 YTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION June 2010 Year-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) Voluntary Costs to Opportunity Economic Achieve, Plan/Office Goodwill and Hedges Adjusted Cinergy Consolidation Other (Mark-to- Discontin
Slide 36: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of June 30, 2010 (In millions) Cash and Cash Equivalents $1,010 Less: Amounts Held in Foreign Jurisdictions (618) $392 Plus: Remaining Availability under Master Credit Facility and a Regional Bank Credit Facility 2,284 Total Available Liq
Slide 37: Diluted EPS Growth Excluding Favorable Weather Impacts
Duke Energy Corporation Diluted EPS Growth Excluding Favorable Weather Impacts Second Quarter 2010 Earnings Review and Business Update August 3, 2010 Q2 2010 Q2 2009 Franchised Electric & Gas (FE&G) - impact of favorable weather on segment EBIT (1) $80 $20 Tax rate - FE&G operations 39% 39% Net of t
Slide 38: Operations and Maintenance Expense
Duke Energy Corporation Operations and Maintenance Expense (In millions) Six months ended June 30, 2010 June 30, 2009 Operation, maintenance and other (a) $1,843 $1,659 Transfers to capital (b) 83 $76 Less: Voluntary opportunity plan/Office consolidation costs (c) (138) - International transmission