Duke Energy Corporation (holding Company) · NYSE:DUK

Duke Energy Corporation (holding Company) — Q2 2017 Earnings Presentation

40 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Aug 3, 2017

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

    SECOND QUARTER EARNINGS REVIEW AND BUSINESS UPDATE Aug. 3, 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  Second quarter 2017 update  Advancing regulatory modernization Markland hydro station, Indiana  Focusing on the customer experience  Making progress on strategic investments FINANCIAL UPDATE Steve Young, Executive VP &

  4. Slide 4: Second quarter 2017 update

    Second quarter 2017 update SECOND QUARTER FINANCIAL HIGHLIGHTS $0.98 REPORTED DILUTED EPS  Growth in the utilities and infrastructure segments DUK annualized dividend FOR 2Q 2017 driven by ongoing investment and higher retail per share(2) COMPARED TO volumes $0.74 IN 2Q 2016  Flexible cost managem

  5. Slide 5: Advancing our strategic vision

    Advancing our strategic vision TRANSFORM THE CUSTOMER EXPERIENCE MODERNIZE THE GENERATE EXPAND NATURAL GAS ENERGY GRID CLEANER ENERGY INFRASTRUCTURE ENGAGE STAKEHOLDERS SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 5

  6. Slide 6: Regulatory modernization remains a top priority

    Regulatory modernization remains a top priority H.B. 589 – COMPETITIVE ENERGY SOLUTIONS FOR NC  Pursued in parallel to Avoided Cost docket at N.C. Utilities Commission  Reforms the Public Utility Regulatory Policy Act (PURPA) process in North Carolina, ENGAGE setting a clear path for more reliable

  7. Slide 7: Focusing on the customer experience

    Focusing on the customer experience ENHANCED CUSTOMER SOLUTIONS AVAILABLE OR IN DEVELOPMENT Pick Your Due Date Duke Energy Prepaid Currently available in DEC, DEK, DEO, DEI Advantage Currently available in DEC-SC (Pilot) TRANSFORM THE CUSTOMER EXPERIENCE Usage Alerts Outage Awareness Currently avail

  8. Slide 8: Making progress on our strategic investments

    Making progress on our strategic investments STATUS UPDATE  Kentucky PSC approved AMI at DEK  Over 2.2 million AMI meters deployed to date  Grid modernization in the Midwest continues (TDSIC rider in Indiana, T&D riders in Ohio) MODERNIZE THE ENERGY GRID  W.S. Lee CCGT, Citrus County CCGT and We

  9. Slide 9: 2Q 2017 Adjusted diluted EPS summary and primary drivers

    2Q 2017 Adjusted diluted EPS summary and primary drivers ADJUSTED DILUTED EARNINGS PER SHARE SEGMENT RESULTS VS. PRIOR YEAR QUARTER (1)(2) Electric Utilities & Infrastructure, +$25 M (+$0.03 per share) $1.07 ▲ Higher retail revenues from increased pricing and riders $1.01 ▲ Increased retail volumes

  10. Slide 10: 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 increase in average number of customers drives 1.0% growth for electric and gas utilities 0.8% 0.6%  Partially offset by lower energy usage per customer in electric utili

  11. Slide 11: Rate case activity underway in North Carolina

    Rate case activity underway in North Carolina DUKE ENERGY PROGRESS RATE CASE OVERVIEW Retail revenue increase requested $477 M (+14.9%) Return on equity requested 10.75% Equity component of capital structure 53% ENGAGE STAKEHOLDERS Proposed rate base (1) ~$8.1 B Hearing begins Nov. 20, 2017 RATE CAS

  12. Slide 12: Our investor proposition

    Our investor proposition A SOLID LONG-TERM HOLDING 4.2% ~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 Aug. 1, 2017 (2) 4-

  13. Slide 13: Investing in infrastructure our customers value

    INVESTING IN INFRASTRUCTURE OUR CUSTOMERS VALUE. DELIVERING SUSTAINABLE GROWTH. SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 13

  14. Slide 14: Appendix materials

    Appendix materials Item Slide(s) Update on Key 2017 Assumptions 15-17 2Q 2017 Supplemental Data 18-23 Financial Supplement 24-27 Other Information 28-32 SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 14

  15. Slide 15: Update on Key 2017 Assumptions

    Update on Key 2017 Assumptions SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 15

  16. Slide 16: Key 2017 adjusted earnings guidance assumptions

    Key 2017 adjusted earnings guidance assumptions ($ in millions) Original 2017 2017 YTD assumptions (1) (thru 6/30/2017) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,109 $1,364 Gas Utilities & Infrastructure $282 $160 Commercial Renewables $99 $51 Other ($268) ($142)

  17. Slide 17: 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

  18. Slide 18: 2Q 2017 Supplemental Data

    2Q 2017 Supplemental Data SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 18

  19. Slide 19: 2Q 2016 – 2Q 2017 adjusted diluted EPS waterfall

    2Q 2016 – 2Q 2017 adjusted diluted EPS waterfall Previously 2Q 2017 Electric Utilities Gas Utilities Commercial Change in Other(1) Disposed Weather Impact & Infrastructure & Infrastructure Renewables Share Count Businesses $0.02 $0.02 ($0.07) $1.12 ▲ Higher earnings ($0.01) $0.08 $1.10 ▲ Higher earn

  20. Slide 20: 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 Businesses $0.02 ($0.08) ($0.03) $0.16 $2.35 ▲ Higher earnings from increased $2.29 ▼

  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 June 30, 2017 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 2.7% 2.4% 1.4% 1.3% 1.3% 1.2% 1.1% 1.0% 0.9% 0.9% 1.0% 0.8% 0.5% 0.6%

  23. Slide 23: 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 DEP • Base rate case May 2, 2017 June 1, 2017 Oct. 20, 2017 Nov. 6, 2017 Nov. 20, 2017 • Rates effective Feb. 1, 2018, NC if approved

  24. Slide 24: Financial Supplement

    Financial Supplement SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 24

  25. Slide 25: 2017 financing plan (as of June 30, 2017)

    2017 financing plan (as of June 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(

  26. Slide 26: 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

  27. Slide 27: Liquidity summary (as of June 30, 2017)

    Liquidity summary (as of June 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) $ 3,150 $ 1,350 $ 1,250 $ 700 $ 600 $ 300 $ 150 $ 500 $ 8

  28. Slide 28: Other Information

    Other Information SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 28

  29. Slide 29: Upcoming events

    Upcoming events Event Date 3Q 2017 earnings call (tentative) November 3, 2017 EEI Financial Conference November 5-7, 2017 SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 29

  30. Slide 30: Investor relations contact information

    Investor relations contact information Mike Callahan, Vice President Investor Relations  Michael.Callahan@duke-energy.com  (704) 382-1603 Mike Switzer, Director Investor Relations  Mike.Switzer@duke-energy.com  (704) 382-6473 Chris Bauer, Manager Investor Relations  Chris.Bauer@duke-energy.com

  31. Slide 31: 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

  32. Slide 32: For additional information on Duke Energy

    For additional information on Duke Energy, please visit: www.duke-energy.com/investors SECOND QUARTER 2017 EARNINGS REVIEW AND BUSINESS UPDATE 32

  33. Slide 33: Non-GAAP Reconciliations: Adjusted Diluted EPS

    Duke Energy Corporation Non-GAAP Reconciliations Second Quarter Earnings Review & Business Update August 3, 2017 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, 2017, include a discuss

  34. Slide 34: 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 Second Quarter Earnings Review and Business Update on August 3, 2017, include a discussion of adjusted segment income and adjusted

  35. Slide 35: Reported to Adjusted Earnings Reconciliation, Three Months Ended June 30, 2017

    DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended June 30, 2017 (Dollars in millions, except per-share amounts) Special Item Reported Costs to Achieve Discontinued Total Adjusted Earnings Piedmont Merger Operations Adjustments Earnings SEGMENT INCOME Electric Ut

  36. Slide 36: Reported to Adjusted Earnings Reconciliation, Six Months Ended June 30, 2017

    DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Six Months Ended June 30, 2017 (Dollars in millions, except per-share amounts) Special Item Reported Costs to Achieve Discontinued Total Adjusted Earnings Piedmont Merger Operations Adjustments Earnings SEGMENT INCOME Electric Util

  37. Slide 37: Reported to Adjusted Earnings Reconciliation, Three Months Ended June 30, 2016

    DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended June 30, 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 Operatio

  38. Slide 38: Reported to Adjusted Earnings Reconciliation, Six Months Ended June 30, 2016

    DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Six Months Ended June 30, 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 Operations

  39. Slide 39: Adjusted Effective Tax Reconciliation

    DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION June 2017 (Dollars in Millions) Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Balance Effective Tax Rate Balance Effective Tax Rate Reported Income From Continuing Operations Before Income Taxes $ 1,018 $ 2,079 Costs to

  40. Slide 40: Available Liquidity Reconciliation

    Duke Energy Corporation Available Liquidity Reconciliation As of June 30, 2017 (In millions) Cash and Cash Equivalents $ 298 Less: Certain Amounts Held in Foreign Jurisdictions (65) Less: Unavailable Domestic Cash (39) 194 Plus: Remaining Availability under Master Credit Facilities and other facilit

Duke Energy — Q2 2017 Earnings Presentation on 6ix