Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q1 2006 Earnings Presentation
30 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, May 2, 2006
Slide 1: First Quarter Earnings Review
First Quarter Earnings Review May 2, 2006 Jim Rogers Chief Executive Officer David Hauser Group Executive and Chief Financial Officer
Slide 2: Agenda
Agenda • Duke Energy’s First Quarter Results • Cinergy’s First Quarter Results • Commitment to Investors • Q&A First Quarter Earnings Review May 2, 2006 2
Slide 3: 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 4: Earnings Summary
Earnings Summary 1Q06 1Q05 DUK Ongoing Earnings per Diluted Share $ 0.48 $ 0.43 DUK Reported Earnings per Diluted Share $ 0.37 $ 0.88 CIN Ongoing Earnings per Diluted Share $ 0.62 $ 0.60 CIN Reported Earnings per Diluted Share $ 0.39 $ 0.60 • Record warm temperatures in the Carolinas, Midwest and Ca
Slide 5: Franchised Electric
Duke Energy Corp Franchised Electric • Segment EBIT increased nearly Reported & Ongoing Segment EBIT 7%, despite record warm weather ($ millions) • Bulk power marketing sales 1Q06 1Q05 increased by about $12 million, Franchised Electric $ 359 $ 336 mostly due to higher prices which overcame slightly
Slide 6: Natural Gas Transmission
Duke Energy Corp Natural Gas Transmission • Reported segment EBIT includes Reported & Ongoing Segment EBIT a $24 million contract termination ($ millions) settlement 1Q06 1Q05 • Major benefits included system Reported Segment EBIT $ 438 $ 411 expansions and higher natural gas processing margins Spec
Slide 7: Field Services
Duke Energy Corp Field Services • Change in Special Items: Reported & Ongoing Segment EBIT ($ millions) In 1Q05, combined gain-on- sales of interests in TEPPCO 1Q06 1Q05 totaled approximately $888 Reported Segment EBIT $ 144 $ 919 million, net of minority interest Special Items (14) (770) Also l
Slide 8: Field Services – Comparison to Pro-Forma 2005 Results
Field Services – Comparison to Pro-Forma 2005 Results Duke Energy Field Services ($ millions) DEFS Net Income 1Q05 $ 1,351 Less Special Items (gain on TEPPCO) (1,134) Pro-Forma DEFS Net Income $ 217 Current Duke Energy Ownership 50% Pro-Forma Ongoing Equity Earnings 1Q05 $ 109 Ongoing Equity Earning
Slide 9: International Energy
Duke Energy Corp International Energy • Reported segment EBIT from Reported & Ongoing Segment EBIT continuing operations increased ($ millions) by 28% from 1Q05 1Q06 1Q05 • Increase is primarily attributable International Energy $ 87 $ 68 to higher volumes and prices in Latin America and continued s
Slide 10: Crescent Resources
Duke Energy Corp Crescent Resources • Reduction due to lower legacy Reported & Ongoing Segment EBIT land sales ($ millions) • Continues to be a solid performer 1Q06 1Q05 • Confident expectations will Crescent Resources $ 42 $ 52 continue to be met First Quarter Earnings Review May 2, 2006 10
Slide 11: Other
Duke Energy Corp Other • Ongoing losses considerably Reported & Ongoing EBIT lower in first quarter 2006 than ($ millions) for first quarter 2005 1Q06 1Q05 • Special Items for 1Q05 included: Other Reported EBIT Loss $ (85) $ (202) $54 million charge from the Special Items 5 82 change in mark-to-mark
Slide 12: Duke Energy North America
Duke Energy Corp Duke Energy North America Good progress on DENA exit • Asset sales On track to close the sale of power generation assets outside the Midwest to LS Power by end of June • T&M contracts Novations of gas and power derivatives contracts acquired by Barclays Capital are 95% complete
Slide 13: Other Items
Duke Energy Corp Other Items • Cash, cash equivalents and short-term investments were approximately $817 million, as of March 31 • Interest expense for the quarter was about $40 million lower than last year, primarily due to deconsolidation of Field Services • Duke Energy resumed stock buyback progr
Slide 14: Cinergy Corp
Cinergy Corp • Decline in Cinergy’s reported Earnings per Diluted Share earnings mostly attributable to merger-related costs of about 1Q06 1Q05 $0.19 per share Ongoing Earnings per $ 0.62 $ 0.60 • Ohio’s rate stabilization plan Diluted Share and retail base rate increases Reported Earnings per $ 0.3
Slide 15: Commitment to Investors
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of our portfolio Reinvesting in the business Developing a strong leadership team with a deep bench Delivering clear and transparent communications First Quarter Earning
Slide 16: Commitment to Investors: Growing Earnings and Dividends
Commitment to Investors Focused on what • Comfortable with the $1.90 matters most to you: target for our current portfolio Growing earnings and of assets dividends over time • Dividend increase continues to be part of our plan Achieving the full value of our portfolio • Striving for earnings growt
Slide 17: Commitment to Investors: Achieving Full Value of Portfolio
Commitment to Investors Focused on what matters most to you: • Evaluating potential of splitting Growing earnings and electric and gas operations dividends over time • Evaluating all businesses for Achieving the full value of opportunities to further “de-risk” our portfolio the portfolio Reinvest
Slide 18: Predictable, Stable Earnings Stream
Predictable, Stable Earnings Stream 2006 Total Ongoing Segment EBIT* Regulated 71.2% Nonregulated 28.8% Gas Transmission Field Services 10.7% 29.6% International Energy 5.9% Crescent Resources 5.3% Franchised Electric 41.6% Commercial Power 6.9% *Excludes “Other”. Graph labels may not reflect exact
Slide 19: Commitment to Investors: Reinvesting in the Business
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time • Plans for new generation… Achieving the full value of North Carolina coal plant our portfolio IGCC plant in Indiana Reinvesting in the business potential South Carolina nuclear plant Dev
Slide 20: Commitment to Investors: Leadership Team
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of • Succession planning for senior our portfolio management Reinvesting in the business • Combined Cinergy and Duke leadership represent the “best Developing a strong o
Slide 21: Commitment to Investors: Clear Communications
Commitment to Investors Focused on what matters most to you: Growing earnings and • Merger Scorecard – tracking dividends over time financial & operational results, Achieving the full value of customer & employee our portfolio satisfaction, and integration milestones Reinvesting in the business •
Slide 22: Value Proposition
Value Proposition We are committed to: • Long-term earnings growth of 4% - 6% • Growing the dividend Current yield at 4.3% 70% payout target • Improving our overall risk profile Improving credit metrics Sum-of-the-parts analysis of our portfolio indicates our share price should be higher First
Slide 23: Slide 23
Slide 24: Non-GAAP Reconciliations for SEC Regulation G
Duke Energy Corporation First Quarter 2006 Earnings Review – May 2, 2006 Non-GAAP Reconciliations for SEC Regulation G Ongoing Diluted Earnings per Share – Duke Energy and Cinergy Corp. The slides and prepared remarks for Duke Energy’s May 2, 2006, Earnings Review include a discussion of Duke Energy
Slide 25: Regulated and Nonregulated operations, in total and by component – 2006
• Regulated and Nonregulated operations, in total and by component – 2006 These ongoing EBIT amounts are non-GAAP financial measures, as they represent historical or forecasted reported amounts adjusted for “special items,” which represent certain charges and credits which management believes will n
Slide 26: Ongoing to Reported Earnings Reconciliation March 2005 YTD
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION March 2005 Year-to-date (Dollars in Millions) Special Items (Note 1) MTM change on Discontinued Mutual Field Services Gains on sales de-designated Operations, Ongoing insurance hedge de- Total Reported of equity Field Services exclu
Slide 27: Ongoing to Reported Earnings Reconciliation March 2006 YTD
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION March 2006 Year-to-date (Dollars in Millions) Special Items (Note 1) Initial Gain and Subsequent Net Ongoing Gain on Sales Discontinued Total Reported Costs to Achieve Gain on Earnings of Assets Operations Adjustments Earnings Contr
Slide 28: Pro-Forma Equity Earnings for Field Services - 1Q 2005
Duke Energy Corporation Pro-Forma Equity Earnings for Field Services - 1Q 2005 Non-GAAP Reconciliation for SEC Regulation G The slides and prepared remarks for Duke Energy's May 2, 2006 Earnings Release include a discussion of pro-forma DEFS equity earnings for the first quarter 2005, which is a non
Slide 29: Cinergy Reconciliation of GAAP Net Income to Ongoing Net Income - 2006
CINERGY CORP. RECONCILIATION OF GAAP NET INCOME TO ONGOING NET INCOME - 2006 (Unaudited) (In thousands) Q1 $ Q1 EPS Regulated Businesses Net Income As Reported $ 34,198 $ 0.17 Cumulative Effect of a Change in Accounting Principle 2,385 $ 0.01 Special Items: Merger and Severance Costs (net of tax eff
Slide 30: Cinergy Reconciliation of GAAP Net Income to Ongoing Net Income - 2005
CINERGY CORP. RECONCILIATION OF GAAP NET INCOME TO ONGOING NET INCOME - 2005 (Unaudited) (In thousands) Q1 $ Q1 EPS Regulated Businesses Net Income As Reported $ 75,896 $ 0.39 Special Items: Severance Costs (net of tax effects of $458) 748 0.01 Ongoing Net Income $ 76,644 $ 0.40 Commercial Businesse