Progress Energy — Q4 2011 Earnings Presentation
35 slides from Progress Energy's earnings presentation, Feb 16, 2012
Slide 1: 4th Quarter 2011 Earnings & 2012 Guidance Call
4th Quarter 2011 Earnings & 2012 Guidance Call February 16, 2012 Bill Johnson Mark Mulhern Chairman, President & CEO Chief Financial Officer
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The matters discussed in this document involve estimates, projections, goals, forecasts, assump
Slide 3: CEO Topics
CEO Topics Ongoing earnings highlights Status of merger approvals Florida settlement and Crystal River 3 update 2012 key focus areas 3
Slide 4: 2011 Ongoing Earnings Highlights
2011 Ongoing Earnings Highlights* (Unaudited) 4th Quarter Full Year $150 $889 $3.06 $900 $871 $2.95 $3.00 $133 $0.50 $0.45 $800 $114 $2.50 $0.39 $700 $0.40 Ongoing Earnings ($M) Ongoing Earnings ($M) $100 $600 $2.00 Ongoing EPS Ongoing EPS $0.30 $500 $1.50 $400 $0.20 $50 $300 $1.00 $200 $0.10 $0.50
Slide 5: Status of Merger Filings
Status of Merger Filings (as of February 16, 2012) Stakeholder Progress on Key Milestones Filed Approved Shareholder Received shareholder approvals on August 23, 2011 R R To date, the parties have met their obligations under the Hart-Scott-Rodino Act (HSR) Department of Justice (DOJ) The perio
Slide 6: Florida Settlement Agreement and Crystal River Update
Florida Settlement Agreement and Crystal River 3 Update Crystal River Unit 3 (CR3) Retains flexibility on decision to repair or retire unit Resolves prudence issues from steam generator replacement project inception through the date Commission approves settlement Resolves CR3 replacement fue
Slide 7: 2012 Key Focus Areas
2012 Key Focus Areas Improve nuclear fleet performance Accelerate Continuous Business Excellence Optimize Balanced Solution Strategy Achieve effective integration planning and merger approvals In addition, maintain strong focus on the daily fundamentals of safety, operations and customer sat
Slide 8: CFO Topics
CFO Topics 2011 financial highlights and ongoing earnings review 2012 earnings guidance • Earnings drivers • Capital expenditures • Cash flow • Financing plan 8
Slide 9: 2011 Financial Highlights
2011 Financial Highlights Delivered ongoing earnings of $2.95 per share, which included a negative $0.08 charge for the impact of replacement power disallowances in the Carolinas Filed comprehensive settlement in Florida which will provide additional regulatory certainty through 2016 Preserved
Slide 10: 2011 Ongoing EPS
2011 Ongoing EPS* (Unaudited) 4th Quarter Full Year $0.45 $3.06 2010 2011 $2.95 $0.42 2010 2011 $0.39 $0.30 $2.13 $0.26 $1.83 $1.79 $1.59 $0.17 Corporate & Other Corporate & Other Carolinas Florida Consolidated Carolinas Florida Consolidated ($0.14) ($0.66) ($0.67) ($0.17) *See appendix for reconcil
Slide 11: 4Q-2011 Ongoing EPS Drivers
4Q-2011 Ongoing EPS Drivers $0.70 $0.01 ($0.21) $0.01 $0.65 $0.01 $0.03 $0.06 $0.60 $0.55 $0.09 $0.50 $45M amortization of cost of removal $0.45 obligation in 4Q-11 ($0.05) EPS $0.45 versus $0 in 4Q-10 ($0.01) $0.40 $0.39 $0.35 $0.30 $0.25 $0.20 2010 O&M Deprec. Clauses & AFUDC Interest Income Weath
Slide 12: 2011 Ongoing EPS Drivers
2011 Ongoing EPS Drivers $3.80 $0.04 $0.01 ($0.45) $0.04 $3.60 $0.07 $0.13 $3.40 $0.31 Includes ($0.05) Includes ($0.08) storm costs and disallowance of $0.05 DOE spent replacement power ($0.15) at PEC EPS $3.20 fuel litigation at PEC $3.06 ($0.05) ($0.03) ($0.02) $3.00 ($0.01) $2.95 $250M amortizat
Slide 13: 2011 Retail Sales
2011 Retail Sales (As of 12/31/2011) Progress Energy Carolinas Progress Energy Florida (Change vs. prior year) (Change vs. prior year) -7.8% -9.7% Residential -0.8% Residential 2.7% -3.6% -2.0% Commercial -1.4% Commercial -1.3% -0.9% -0.7% Industrial -0.9% Industrial -0.7% -4.6% -6.1% Total Retail -
Slide 14: Customer Growth & Usage
Customer Growth & Usage Average Customer Growth* Residential Customers Using Less 35,000 (000s) Than 200 kWh Per Month 95 7.0% 30,000 90 25,000 6.5% 85 20,000 80 6.0% 15,000 75 10,000 70 5.5% 5,000 65 0 60 5.0% Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-1
Slide 15: Crystal River Unit 3 Nuclear Outage
Crystal River Unit 3 Nuclear Outage • PEF filed comprehensive settlement agreement in • Reclassified $222M from NEIL receivable to Docket #120022-EI which provides regulatory deferred fuel regulatory asset ($154M) and recovery guidelines related to unit CWIP ($68M) • Continuing discussions with NEIL
Slide 16: 2012 Ongoing EPS Drivers
2012 Ongoing EPS Drivers $3.40 $0.06 PEC: $0.01 OATT changes ($0.05) PEF: $0.07 OATT true-up; $0.08 ($0.04) rate changes ($0.04) $0.08 ($0.03) ($0.01) $3.18 $3.20 $0.09 PEC: $0.04 DSM/EE PEF: $0.02 Misc. revenues $3.03 ($0.08) $0.09 $3.00 EPS 2011 items: $2.80 $2.95 • ($0.08) disallowance of replace
Slide 17: Wholesale Base Revenues
Wholesale Base Revenues $400 Future Wholesale Upside $350 Carolinas • Fayetteville contract extension mid-2012 $300 • Existing partial requirements, fixed price contract expires Jun-12 $250 • New 20-yr full requirements, formula-rate contract begins Jul-12 $ in Millions $200 • NCEMC contract expansi
Slide 18: Attractive Rate Base Growth
Attractive Rate Base Growth Carolinas Florida $12,000 $12,000 $11,000 $11,000 $10,000 $10,000 $9,000 $9,000 Rate Base (x 1M) Rate Base (x 1M) $8,000 $8,000 $7,000 $7,000 $6,000 $6,000 $5,000 $5,000 $4,000 $4,000 $3,000 $3,000 $2,000 $2,000 $1,000 $1,000 $0 $0 2010A 2011A 2012E 2013E 2014E 2010A 2011
Slide 19: Major Capital Projects
Major Capital Projects Lee CCGT – North Carolina Major Construction Projects ($M) • 920 MW combined-cycle gas-fired plant $750 • Project broke ground in September 2010 • Expected in-service in January 2013 $225 $600 Sutton CCGT – North Carolina • 625 MW combined-cycle gas-fired plant $340 • Project
Slide 20: Projected Capital Expenditures
Projected Capital Expenditures* ($ in millions) 2011A 2012E 2013E 2014E Maintenance Capex Generation $630 $690 $745 $755 Environmental 7 50 90 205 Transmission 100 100 120 100 Distribution 158 190 225 230 Other 88 80 100 80 Total Maintenance Capex 983 1,110 1,280 1,370 Growth Capex Generation 560 33
Slide 21: Projected Cash Flow
Projected Cash Flow ($ in millions) 2011A 2012E Adjusted cash flow $1,949 $2,560 Pension fund contributions (pre-tax)1 (334) (175) Operating cash flow 1,615 2,385 Nuclear fuel and decommissioning trust (275) (210) Maintenance & corporate/other capex2 (999) (1,140) AFUDC debt (35) (35) Common dividen
Slide 22: 2012 Financing Plan
2012 Financing Plan Progress Energy, Inc. • Refinance $450 million maturity due April 15, 2012 • Equity issuances of approximately $300 million in second half of year if merger does not close in a timely manner Progress Energy Carolinas • Refinance $500 million maturity due July 15, 2012 • Addit
Slide 23: Appendix
Appendix Item Slides 2012 Earnings Guidance Support 24 – 27 Fixed Income Support 28 – 31 Reconciliation of Ongoing Earnings 32 – 34 23
Slide 24: 2012 Earnings Guidance Support
2012 Earnings Guidance Support 24
Slide 25: Weather-Normalized Retail Sales
Weather-Normalized Retail Sales Progress Energy Carolinas Progress Energy Florida 50,000 50,000 (0.8%) (2.7%) +2.0% (0.9%) +1.5% (1.7%) (4.0%) (1.8%) +0.6% (0.4%) 40,000 40,000 30,000 GWh 30,000 GWh 20,000 20,000 10,000 10,000 - - 2007 2008 2009 2010 2011 2012E 2007 2008 2009 2010 2011 2012E Residen
Slide 26: Depreciation & Amortization
Depreciation & Amortization ($ in millions) Progress Energy Carolinas Progress Energy Florida $600 Cost of removal $600 Storm cost deferral $500 $500 amortization $400 GridSouth amortization $400 $300 Nuclear recovery amortization $200 $300 Harris nuclear depreciation 1 $100 Clean Smokestacks Act $2
Slide 27: Allowance for Funds Used During Construction (AFUDC)
Allowance for Funds Used During Construction (AFUDC) Carolinas1 Florida2 $140 ($ in millions) $140 $120 $120 $100 $100 AFUDC - Debt $80 AFUDC - Equity 3 $80 $60 $60 $40 $40 $20 $20 $0 $0 2007A 2008A 2009A 2010A 2011A 2012E 2007A 2008A 2009A 2010A 2011A 2012E 1. PEC capital projects lasting more than
Slide 28: Fixed Income Support
Fixed Income Support 28
Slide 29: Liquidity Position and Near-Term Debt Maturities
Liquidity Position and Near-Term Debt Maturities ($ in millions) Liquidity position Near-term debt maturities (as of December 31, 2011) (as of December 31, 2011) PGN PEC PEF $1,978 ($673) $950 $0 $830 $230 $1,535 $500 $425 $450 $405 $300 Total credit Drawn Short-term debt Cash & cash Total liquidity
Slide 30: Capitalization and Short-Term Debt
Capitalization and Short-Term Debt ($ in millions) As of December 31, 2011 PGN Consol. % PEC % PEF % Short-term Debt 1 $ 671 2.8% $ 219 2.3% $ 241 2.5% Current Portion of Long-term Debt 950 4.0% 500 5.2% - 0.0% Capital Lease Obligations 211 0.9% 12 0.1% 199 2.1% Long-term Debt Long-term Debt, affili
Slide 31: Credit Ratings
Credit Ratings As of February 15, 2012 1 2 Progress Energy Moody’s S&P Fitch Outlook Stable Watch Positive Stable Corporate Credit Rating -- BBB+ BBB Senior Unsecured Debt Baa2 BBB BBB Commercial Paper P-2 A-2 F2 Progress Energy Carolinas Outlook Stable Watch Positive Stable Corporate Credit Rating
Slide 32: Reconciliation of Ongoing Earnings
Reconciliation of Ongoing Earnings 32
Slide 33: Reconciliation of Ongoing to GAAP Earnings
Reconciliation of Ongoing to GAAP Earnings (Unaudited) Progress Energy, Inc. Reconciliation of Ongoing Earnings per Share to Reported GAAP Earnings per Share Three Months Ended December 31 Years Ended December 31 2011 2010 2011 2010 2009 Ongoing earnings per share $0.39 $0.45 $2.95 $3.06 $3.03 Tax l
Slide 34: Ongoing Earnings Adjustments
Ongoing Earnings Adjustments Progress Energy’s management uses ongoing earnings per share to evaluate the operations of the company and to establish goals for management and employees. Management believes this non-GAAP measure is appropriate for understanding the business and assessing our potential
Slide 35: Progress Energy
K Progress Energy