Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Investor Presentation (June 2021)
54 slides from Duke Energy Corporation (holding Company)'s investor presentation, Jun 11, 2021
Slide 1: Duke Energy Investor Update, June 2021
June 2021 DUKE ENERGY INVESTOR UPDATE // 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: Agenda
Agenda ▪ Value proposition and accomplishments ▪ Large-scale platform ▪ Strong growth outlook ▪ Jurisdictional updates ▪ Operational excellence and governance DUKE ENERGY INVESTOR UPDATE – SUMMER 2021 //// 44
Slide 5: Our investor value proposition
Our investor value proposition A STRONG LONG-TERM RETURN PROPOSITION 3.8% ~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 6: Recent accomplishments provide clarity and momentum
Recent accomplishments provide clarity and momentum ADVANCED STRATEGY WHILE MAINTAINING OPERATIONAL EXCELLENCE ✓ Raised growth rate to 5% - 7%(1), driven by the largest fleet transition in the US ✓ Hosted inaugural ESG day, clearly articulating our clean energy transition and investment opportunity
Slide 7: Total Shareholder Return (TSR)
Total Shareholder Return (TSR) STRONG TRACK RECORD OF DELIVERING SUPERIOR SHAREHOLDER RETURNS (1) Source: Factset. As of June 8, 2021; (1) Reflects gross total shareholder return of the S&P 500 Utility Index DUKE ENERGY INVESTOR UPDATE – SUMMER 2021 //// 77
Slide 8: Clear vision for the future – to lead the energy transition
Clear vision for the future – to lead the energy transition Our Clean Energy Transformation ≥50% REDUCTION IN CO2 EMISSIONS AND NET-ZERO METHANE EMISSIONS BY 2030 ON THE WAY TO NET-ZERO CO2 BY 2050 Near-term initiatives Carolinas • Collaborating with NC policymakers Transform the system and stakehol
Slide 9: Duke Energy – a large scale, highly regulated energy infrastructure company
Duke Energy – a large scale, highly regulated energy infrastructure company HEADQUARTERED IN ELECTRIC UTILITIES CHARLOTTE, NC & INFRASTRUCTURE ▪ Operating in six constructive jurisdictions, with attractive allowed ROEs, serving 7.9 million retail customers ▪ Customer rates below the national average
Slide 10: Organized to leverage our scale, but with a regional focus
Organized to leverage our scale, but with a regional focus Enterprise Shared Services State Presidents Operations ▪ Governed centrally to control costs ▪ Governed jurisdictionally ▪ Governed through Chief Operating and maximize efficiency across the ▪ Each state president lives locally and Officer a
Slide 11: Leveraging our scale by investing for the future
Leveraging our scale by investing for the future Optimist Hall Duke Energy: Lighthouse ▪ Dedicated innovation center in Charlotte, NC Our achievements in operational excellence are delivering a digital transformation ▪ Allows software engineers, designers, data scientists and business units to colla
Slide 12: Complementary businesses with strong growth opportunities
Complementary businesses with strong growth opportunities ELECTRIC UTILITIES 2021 ADJUSTED 2021-2025 2021 – 2025 & INFRASTRUCTURE EPS CONTRIBUTION(1) CAPEX ADJUSTED EPS CAGR(2) 86% $49.5 B Consolidated 5-7% GAS UTILITIES & INFRASTRUCTURE 8-10% 9% $5.7 B 5-7% COMMERCIAL RENEWABLES 5% $2.5 B(3) Electr
Slide 13: Projected growth over five-year plan
Projected growth over five-year plan ($0.13) UPSIDES TO PLAN 5-YEAR ADJUSTED EPS GROWTH PLAN(1) ▪ Acceleration of clean energy transformation ▪ Sustainable cost transformation ▪ Federal legislation, including infrastructure ▪ Stronger and faster economic recovery ITEMS TO MONITOR $5.12 ▪ Economic re
Slide 14: Making investments to accelerate our pace of change
Making investments to accelerate our pace of change GROWING FIVE-YEAR CAPITAL … AS WE EXECUTE THE LARGEST PLAN DRIVES SIGNIFICANT COAL CLOSURE IN THE INDUSTRY EARNINGS BASE GROWTH… Capex plan $65B - $75B 50 TO 70% $59B REDUCTION IN ACTIVE $56B COAL UNITS BY 2030(1) 2020 – 2024 2021 – 2025 2025 – 202
Slide 15: Balance sheet supports our long-term growth strategy
Balance sheet supports our long-term growth strategy COMMITTED TO STRONG CASH FLOWS SUPPORTIVE OF CREDIT RATINGS ▪ Duke Energy operates in constructive jurisdictions, with a de-risked financial plan – Rate case orders or settlements in Carolinas, Indiana, Florida and Tennessee ▪ Proven capability to
Slide 16: Size and scale enhance credit quality
Size and scale enhance credit quality FFO/Debt downgrade thresholds Moody’s: Baa2(1) S&P: BBB(1) Commentary “A utility that warrants a Strong or 13% 12% Strong/Adequate assessment has scale, scope, and diversity. We Peer A 13% Peer F 12% generally believe a larger service territory with a diverse cu
Slide 17: Carolinas update
Carolinas update Lowest total nuclear fleet operating costs in NC COAL ASH AND RATE CASE ORDERS the nation in 2019 and 2020 ELIMINATE UNCERTAINITY… Total Operating Cost (1) $23.67 $23.24 ▪ ROE of 9.6%; 52% equity ratio $20.08 $20.04 ▪ Deferral treatment of grid improvement plan projects of $1.2 bill
Slide 18: Florida update
Florida update RESOLVED REGULATORY HEADWINDS Earnings Base, 2015-2025 POST PROGRESS MERGER… $22.4 Earnings Base ▪ Cost recovery and securitization of CR-3 nuclear $15.5 ($B) plant $9.4 ▪ ~$1 billion of cost recovery, including a return, of Levy investments ▪ Full NBV recovery of retired CR 1&2 coal-
Slide 19: Midwest update
Midwest update Duke Energy Indiana Duke Energy Ohio FAIR AND CONSTRUCTIVE RATE CASE LOW RISK BUSINESS WITH EFFICIENT OUTCOME IN 2020… RECOVERY MECHANISMS ▪ Order supports strong cash flows and recovery of ▪ Ohio: Consistent deployment of capital through generation and grid investments riders in wire
Slide 20: Piedmont update
Piedmont update 2016 PIEDMONT ACQUISITION HAS … AND GOOD FOR PIEDMONT BEEN GOOD FOR SHAREHOLDERS… CUSTOMERS 772 Satisfaction Customer Rate Base 18% $6.1 Scores 45 pt ($B) CAGR increase $3.2 727 2016 2020 2016 2020 $1.34 $1.23 Avg Customer Rate $273 Net Income 25% Modest ($M) $139 CAGR ~2% CAGR 2017
Slide 21: 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 22: Rates below national average across all jurisdictions and customer classes
Rates below national average across all jurisdictions and customer classes COMPETITIVE CUSTOMER RATES(1) REGULATED ELECTRIC EIGHT UTILITIES IN 2020 EARNINGS BASE RESIDENTIAL HIGH-QUALITY U.S. AVG. 13.65 DEO - Electric DEK - Electric REGIONS OF THE U.S. DEP (SC) 12.43 4% 2% DEF 12.40 DEC (SC) 12.24 D
Slide 23: Duke’s scale enables top tier O&M performance
Duke’s scale enables top tier O&M performance Duke Energy compares favorably against peer group across multiple O&M metrics ▪ #2 on non-generation O&M cost per customer vs. peer utilities – Peer group: AEP, SO, EXC, NEE, D, XEL, ED, ES, WEC ▪ Scale better positions Duke to drive O&M efficiencies ▪ O
Slide 24: Strong O&M cost management track record
Strong O&M cost management track record Event-driven cost savings Sustainable cost efficiencies 2006: Cinergy merger ▪ Integrated functions with strong jurisdictional leadership ▪ $300M in synergies in non-fuel O&M ▪ Best practice sharing and scale purchasing ▪ ~9% of total non-fuel O&M ▪ Employing
Slide 25: 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 ▪ 12 out of 13 directors are independent (all directors except Chair, Preside
Slide 26: Appendix
Appendix // 26
Slide 27: Q1 2021 and 2021 guidance support
Q1 2021 and 2021 guidance support // 27
Slide 28: Q1 2021 adjusted EPS summary and primary drivers
Q1 2021 adjusted EPS summary and primary drivers SEGMENT RESULTS VS. PRIOR YEAR QUARTER(1) ($0.13) REPORTED $0.47 EARNINGS PER SHARE Electric Utilities & Infrastructure, +$115 M (+$0.15 per share)(2) $0.47 $1.25 ▲ Contribution from base rate changes (+$0.10 per share) $1.24 ($0.45) $0.45 ▲ Weather (
Slide 29: Retail electric volumes
Retail electric volumes Q1 2021 RETAIL ELECTRIC VOLUMES(1) RESIDENTIAL ▪ Work from home and remote learning continue to drive strong volume results 2.6% ▪ Strongest residential growth trend in the last (1.1%) decade, particularly in the Southeast (2.0%) COMMERCIAL (5.0%) ▪ Winter surge of COVID-19 i
Slide 30: 2021 EPS guidance and balance of the year consideration
2021 EPS guidance and balance of the year consideration SHAPING CONSIDERATIONS COMPARED TO 2020 $5.00 - $5.30(1) 2Q21 3Q21 4Q21 Load O&M timing driven by 2020 mitigation efforts ACP -- -- 2021 Guidance Range Other 2020 mitigation timing, -- including tax optimization Q4 2020 storms -- -- ON TRACK TO
Slide 31: 2021 Financial outlook – adjusted EPS waterfall
2021 Financial outlook – adjusted EPS waterfall Electric Gas Utilities & Commercial ACP including Utilities & Other Infrastructure Renewables Financing(1) Infrastructure ($0.10) $0.04 ($0.09) ($0.30) $0.48 ▲ Rate cases ▲ Integrity ▼ Less management incremental riders growth ▼ Tax optimization ▲ Cust
Slide 32: Retail electric volumes
Retail electric volumes 2020 RETAIL ELECTRIC VOLUMES(1) FORECASTED 2021 RETAIL ELECTRIC VOLUMES(2) 2.6% 2% - 4% 2% - 3% 1% - 2% (2.3%) (0.5% - 1%) Residential Commercial Industrial Total Retail (5.5%) (5.5%) KEY MESSAGES Residential Commercial Industrial Total Retail ▪ Expect favorable volume relati
Slide 33: Capital plan focused on clean energy transition
Capital plan focused on clean energy transition Growing 5-year capex ~5% profile… …supports emission reductions as LDC we drive toward net-zero ~10% $65B - $75B 100% Through 2020 reduced 80% CO2 emissions > 40% $58B $59B 60% $56B 40% LDC Gas 20% 10% 0% 2020 – 2024 2020 – 2024 2021 – 2025 2025 – 2029
Slide 34: Other Supplemental Information
Other Supplemental Information // 34
Slide 35: Carolina IRPs: Summary Results
Carolina IRPs: Summary Results Earliest 70% CO2 70% CO2 Reduction: Base without Base with Practicable No New Gas Reduction: High Small Modular Carbon Policy Carbon Policy Coal Generation High Wind Reactor (SMR) Retirements Pathway A B C D E F System CO2 Reduction 56% 53% 59% 62% 64% 64% 70% 73% 71%
Slide 36: Carolinas IRPs: Commission rules and review process
Carolinas IRPs: Commission rules and review process ▪ The 2020 IRP includes a most economic or “least-cost” portfolio, as required by North Carolina Utilities Commission (NCUC) Rule R8-60 and subsequent orders, and the Public Service Commission of South Carolina (PSCSC) and The Energy Freedom Act (A
Slide 37: Regulatory update
Regulatory update NC RATE CASE ORDERS – DUKE ENERGY FLORIDA LDC RATE CASES FILINGS DEC AND DEP ORDER PIEDMONT-NC/DEK ▪ Approved Partial Stipulations: ▪ FPSC approved the Settlement on PNG-NC RATE CASE FILING May 4; Order issued June 4 ▪ Filed on March 22, 2021 − ROE of 9.6%; 52% equity component of
Slide 38: Advancing EV Infrastructure
Advancing EV Infrastructure ▪ Investing $100 million to support decarbonization of the transportation sector across the Southeast. Approved programs include: ▪ FL: building 700 charging stations by 2026 (590 in service) ▪ NC pilot: building 310 charging stations by 2023 ▪ SC pilot: building 60 charg
Slide 39: Gas utilities & infrastructure
Gas utilities & infrastructure GAS UTILITIES WITH LOW VOLUMETRIC EXPOSURE DUE TO MOSTLY FIXED MARGINS… MARGIN STABILIZING MECHANISMS 13% 10% 1. Purchased Gas All States 77% Adjustment 87% MOSTLY 2. Uncollectible Recovery All States FIXED 3. Integrity Management North Carolina MARGINS Rider (“IMR”) a
Slide 40: Commercial Renewables asset locations
Commercial Renewables asset locations A full list of generation facilities can be found at: https://www.duke-energy.com//_/media/pdfs/our-company/investors/duke-energy-generation-portfolio.pdf DUKE ENERGY INVESTOR UPDATE – SUMMER 2021 //// 40 40
Slide 41: Upcoming Events & Other
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Slide 42: Upcoming events
Upcoming events Event Date 2Q 2021 earnings call (tentative) August 5, 2021 3Q 2021 earnings call (tentative) November 4, 2021 DUKE ENERGY INVESTOR UPDATE – SUMMER 2021 //// 42 42
Slide 43: 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 44: For additional information on Duke Energy, please visit duke-energy.com/investors
For additional information on Duke Energy, please visit: duke-energy.com/investors DUKE ENERGY INVESTOR UPDATE – SUMMER 2021 //// 44 44
Slide 45: Duke Energy Corporation Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Duke Energy Investor Update June 2021 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Investor Update in June 2021 include a discussion of adjusted EPS for the quarter-to-date periods ended March 31, 2021 an
Slide 46: Adjusted Segment Income (Loss) and Adjusted Other Net Loss
Due to the forward-looking nature of this non-GAAP financial measure for future periods, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project all special items for future periods, such as legal settlement
Slide 47: Net regulated Electric and Gas O&M
ended December 31, 2020, 2019, 2018, 2017 and 2016, as well as the forecasted year-to-date period ended December 31, 2021. Net regulated Electric and Gas O&M is a non-GAAP financial measure, as it represents reported O&M expenses adjusted for special items and expenses recovered through riders and e
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Slide 49: Reported to Adjusted Earnings Reconciliation, Three Months Ended March 31, 2021
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2021 (Dollars in millions, except per share amounts) Special Item Reported Gas Pipeline Total Adjusted Earnings Investments Adjustments Earnings SEGMENT INCOME Electric Utilities and Infrastructure $ 82
Slide 50: Reported to Adjusted Earnings Reconciliation, Three Months Ended March 31, 2020
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2020 (Dollars in millions, except per share amounts) Special Item Reported Total Adjusted Earnings Severance Adjustments Earnings SEGMENT INCOME Electric Utilities and Infrastructure $ 705 $ — $ — $ 705
Slide 51: Duke Energy Corporation Operations, Maintenance and Other Expense
Duke Energy Corporation Operations, Maintenance and Other Expense (In millions) Actual Actual Actual Actual Actual Forecast December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 Operation, maintenance and other(a) $6,223 $5,944 $6,463 $6,066 $5,7
Slide 52: Duke Energy - Carolinas Jurisdictions Operations, Maintenance and Other Expense
Duke Energy - Carolinas Jurisdictions Operations, Maintenance and Other Expense (In millions) Actual Actual Actual Actual Actual Forecast December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 Operation, maintenance and other (a) - Duke Energy Car
Slide 53: Duke Energy - Florida Operations, Maintenance and Other Expense
Duke Energy - Florida Operations, Maintenance and Other Expense (In millions) Actual Actual Actual Actual Actual Forecast December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 Operation, maintenance and other(a) - Duke Energy Florida $884 $853 $1
Slide 54: Duke Energy - Midwest Jurisdictions Operations, Maintenance and Other Expense
Duke Energy - Midwest Jurisdictions Operations, Maintenance and Other Expense (In millions) Actual Actual Actual Actual Actual Forecast December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 Operation, maintenance and other (a) - Duke Energy India