Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q3 2022 Earnings Presentation
45 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Nov 4, 2022
Slide 1: Q3 2022 Earnings Review and Business Update
Q3 / 2022 Earnings Review and Business Update Lynn Good / Chair, President and CEO Brian Savoy / Executive Vice President and CFO November 4, 2022 // 1
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 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. These statements are based on management’s beliefs and assumptions and can often be identified by terms and
Slide 4: Financial highlights - 2022
Financial highlights - 2022 $1.81 / $1.78 Q3 2022 REPORTED / ADJUSTED EPS RESULTS DRIVEN BY STRONG VOLUMES IN ELECTRIC SEGMENT, OFFSET BY TIMING OF COMMERCIAL RENEWABLES PROJECTS STRATEGIC REVIEW COMPLETE PURSUING SALE OF COMMERCIAL RENEWABLES MOVING TO DISCONTINUED OPS IN Q4 $5.20 - $5.30 2022 ADJU
Slide 5: Commercial Renewables sale update and pro forma earnings guidance
Commercial Renewables sale update and pro forma earnings guidance Strategic rationale Exit from capital intensive business with slower EPS 2023 ADJUSTED EPS GUIDANCE growth than our utility platform Compelling time to exit with competitive buyer field $5.55 - $5.75 at attractive valuation = Cr
Slide 6: DE Progress North Carolina rate case
DE Progress North Carolina rate case FILED FIRST MULTI-YEAR RATE PLAN Rate case filing (Docket E-2 sub 1300) IN NORTH CAROLINA Return on equity requested 10.2% Filed base rate case with a performance-based regulation (PBR) application on October 6 Equity component of capital structure 53% Histor
Slide 7: Other regulatory and policy updates
Other regulatory and policy updates Carbon plan hearings held in September; NCUC to North issue order by end of year Carolina DE Carolinas T&D technical conference conducted on November 2; rate case to be filed in early 2023 Filed DE Progress rate case in September; requested rates effective n
Slide 8: Federal update - Inflation Reduction Act (IRA) of 2022
Federal update - Inflation Reduction Act (IRA) of 2022 EXPECT SIGNIFICANT ENTERPRISE-WIDE TAX INCENTIVES OVER NEXT DECADE(1) Existing Nuclear Production Tax Credits (“PTCs”) Our low-cost Carolinas nuclear units are expected to qualify (most operate below the $43.75/MWh phase-out threshold) Proje
Slide 9: Q3 2022 reported and core business adjusted EPS summary
Q3 2022 reported and core business adjusted EPS summary REPORTED CORE BUSINESS ADJUSTED RESULTS EARNINGS PER SHARE VS. PRIOR YEAR QUARTER – $4.00 $4.03 EXCLUDES COMMERCIAL(1) Electric Utilities & Infrastructure, +$51 M (+$0.06 per share) $1.79 $1.81 ▲ Retail electric volumes ▲ Lower O&M 2021 2022 ▼
Slide 10: Retail electric volumes
Retail electric volumes RETAIL LOAD TRENDS & ECONOMIC UPDATE Increase in Residential customers and rebounding Commercial class drove Q3 growth Residential load now ~5% above pre-COVID levels Commercial benefited from new store openings and expanded data center usage Industrial growth continu
Slide 11: 2022 Financial outlook – Q4 adjusted EPS waterfall
2022 Financial outlook – Q4 adjusted EPS waterfall 2022 Adjusted EPS per share expectations(1) Original 2022 Remove Commercial Updated 2022 Core Business Core Business 2022 Updated Guidance Midpoint Renewables Guidance Midpoint Q1 - Q3 Actual Q4 Estimate Guidance $5.45 ($0.20) $5.25 $4.15 $1.05 - $1
Slide 12: 2023 earnings growth drivers to achieve $5.55 - $5.75
2023 earnings growth drivers to achieve $5.55 - $5.75(1) Volumes ▲ Load and customer growth ▼ Normal weather Rate cases and riders ▲ Carolinas rate cases ▲ Florida multi-year rate plan and SPP rider ▲ Ohio electric distribution rate case ▲ Kentucky electric rate case ▲ Midwest grid investment riders
Slide 13: Our investor value proposition
Our investor value proposition A STRONG LONG-TERM RETURN PROPOSITION 4.3% ~10% 5 -7% DIVIDEND YIELD(1) ATTRACTIVE zzz LONG-TERM WITH LONG-TERM RISK-ADJUSTED EPS GROWTH(4) DIVIDEND GROWTH TOTAL SHAREHOLDER THROUGH 2027 COMMITMENT(2) RETURN(3) CONSTRUCTIVE JURISDICTIONS, LOWER-RISK REGULATED INVESTMEN
Slide 14: Appendix
APPENDIX // 14
Slide 15: Hurricane Ian response and recovery
Hurricane Ian response and recovery Staging at Tropicana Field, St. Petersburg, FL 20,000 resources on the front lines of restoration work, with thousands more Duke Energy employees prepared for mobilization Estimated restoration costs of $425-500 million with 96% of O&M costs eligible for storm
Slide 16: Regulatory activity details
Regulatory activity details FILING DOCKET KEY STATUS TYPE NO. DRIVERS Hearing expected May ’23(2) Requested: ROE 10.2%; 53% equity cap. structure NC Base Rate Temporary rates subject to refund Investments in grid, energy storage, solar Case and PBR(1) E-2 Sub expected June ’23 Implement pe
Slide 17: Energy transition update key messages (Oct. 4, 2022)
Energy transition update key messages (Oct. 4, 2022) Our pace of change is underscored by an unwavering commitment to customer affordability and reliability Introducing two additional interim emission reduction targets on our path to net-zero Scope 1: 80% by 2040(1) Scope 2&3: 50% by 2035(2) Upd
Slide 18: Cost-effective clean energy transition drives earnings base growth
Cost-effective clean energy transition drives earnings base growth ~$145 BILLION OF REGULATED CAPITAL ~$120 BILLION (~85% OF 10-YR PLAN) COMMITTED TO EXPENDITURES OVER THE NEXT 10 YEARS(1)… FLEET TRANSITION AND GRID MODERNIZATION $80B - $85B ~$75B $63B -$56B $66B ~$40B ~$5B ~$25B Grid investments Re
Slide 19: Road to Net-zero
Road to Net-zero Where we’ve been Where we’re going (2005 – 2021) (2022 & beyond) 2030 On track to exceed 50% Scope 1 reduction 2035 target(1) New interim target 50% Scope 2 & 3 reduction(2) 2040 7,500 MW New interim target coal retired 80% Scope 1 6,000 MW reduction(1) 2050 regulated Affirming rene
Slide 20: Indiana energy transition
Indiana energy transition TRANSITION TO CLEANER ENERGY WITH FOCUS ON RELIABILITY AND AFFORDABILITY Preferred portfolio reduces carbon emissions from our Indiana fleet by 63% in 2030 and 88% by 2040, compared to 2005 levels Key components of the company’s preferred 20-year plan include: Adds ov
Slide 21: Commercial Renewables data points
Commercial Renewables data points (values as of Sept. 30, 2022) CAPACITY BY REGION AND RESOURCE TYPE Gross MWs Solar Wind Battery Total Texas 658 1,981 36 2,675 West 414 421 - 835 Southwest 54 - - 54 Southeast 401 - - 401 Midwest - 872 2 874 Northeast 25 139 - 164 Total Gross MW 1,688(1) 3,413 38 5,
Slide 22: 2022 Supplemental Financial Information
2022 SUPPLEMENTAL FINANCIAL INFORMATION // 22
Slide 23: Key 2022 adjusted earnings guidance assumptions
Key 2022 adjusted earnings guidance assumptions ($ in millions) Original 2022 2022 YTD Assumptions (1) (thru 9/30/2022) Adjusted segment income/(expense)(2): Electric Utilities & Infrastructure $4,170 $3,394 Gas Utilities & Infrastructure $470 $277 Commercial Renewables $150 $55 Other ($595) ($486)
Slide 24: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2022 2021 income to normal: Pretax Weighted EPS impact Pretax Weighted EPS impact impact avg. shares favorable / impact avg. shares favorable / (unfavorable) (unfavorable) First Quarter ($33) 770 ($0.03) ($17) 769 ($0.02) Second Quarter $1
Slide 25: Key 2022 earnings sensitivities
Key 2022 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.53 $1 billion change in rate base +/- $0.07 Electric Utilities & Infrastructure 1% change in Electric Utilities volumes Industrial +/- $0.02 (2) +/- $0.15(1) (2) Commercial +/- $0.05 (2) Residential +/- $0.
Slide 26: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities Rolling Twelve Months, as of September 30, 2022 3.6% 3.7% 3.6% 3.2% 3.5% 2.7% 2.5% 2.2% 2.1% 2.0% 1.9% 1.5% 1.7%
Slide 27: Financing Plan Update and Current Liquidity
FINANCING PLAN UPDATE AND CURRENT LIQUIDITY // 27
Slide 28: 2022 Financing plan
2022 Financing plan(1) Estimated / Actual Completed Issuer Amount Security Date Issued Term Rate 2022 Maturities(2) ($ in millions) ($ in millions) (3) $1,400 Term Loan March 9, 2022 $1,400 2-year Floating $500 (4) $234 5-year (AMT) 4.25% $402 Tax-Exempt Debt June 2, 2022 (4) $168 5-year (Non-AMT) 4
Slide 29: Liquidity summary (as of September 30, 2022)
Liquidity summary (as of September 30, 2022) ($ 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) $ 3,000 $ 1,225 $ 950 $ 1,350 $ 900 $ 600 $ 175 $ 80
Slide 30: Debt maturities through 2024 by issuer
Debt maturities through 2024 by issuer (as of September 30, 2022) (1) ($ in millions) Entity Security Type Amount Rate Type Settlement Date Maturity Date Maturity by Year Duke Energy Corporation InterNotes $9.4 2.60% Fixed 11/27/12 12/15/22 2022 - $9 Duke Energy Corporation Sr. Notes $350.0 2.875% F
Slide 31: Upcoming Events & Other
UPCOMING EVENTS & OTHER // 31
Slide 32: Upcoming events
Upcoming events Event Date 2022 EEI Financial Conference November 13-15, 2022 4Q 2022 earnings call (tentative) February 9, 2023 // 32 THIRD QUARTER 2022 EARNINGS REVIEW AND BUSINESS UPDATE // 32
Slide 33: 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 34: HEADLINE GOES HERE
HEADLINE GOES HERE For additional information on Duke Energy, please visit: duke-energy.com/investors // 34 SECOND QUARTER 2022 EARNINGS REVIEW AND BUSINESS UPDATE
Slide 35: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Third Quarter Earnings Review & Business Update November 4, 2022 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Third Quarter Earnings Review and Business Update on November 4, 2022, include a discussion of
Slide 36: Core Business Adjusted EPS and Adjusted EPS Guidance
Energy’s ongoing performance (as discussed above under Adjusted EPS). The most directly comparable GAAP measure for adjusted EPS is reported EPS attributable to Duke Energy Corporation common stockholders. Calculations of Core Business Adjusted EPS are included below: Adjusted EPS Duke Commercial Co
Slide 37: Adjusted Segment Income (Loss) and Adjusted Other Net Loss
Adjusted Segment Income (Loss) and Adjusted Other Net Loss The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 4, 2022, include a discussion of adjusted segment income (loss) and adjusted other net loss for the quarter and year-to-date periods ended Septembe
Slide 38: Available Liquidity
Available Liquidity The materials for Duke Energy’s Third Quarter Earnings Review and Business Update on November 4, 2022, include a discussion of Duke Energy’s available liquidity balance. The available liquidity balance presented is a non-GAAP financial measure as it represents cash and cash equiv
Slide 39: Reported to Adjusted Earnings Reconciliation, Three Months Ended September 30, 2022
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2022 (Dollars in millions, except per share amounts) Special Item Reported Mark-to- Discontinued Total Adjusted Earnings Market Operations Adjustments Earnings SEGMENT INCOME Electric Utilities and
Slide 40: Reported to Adjusted Earnings Reconciliation, Nine Months Ended September 30, 2022
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2022 (Dollars in millions, except per share amounts) Special Items Reported Regulatory Mark-to- Discontinued Total Adjusted Earnings Matters Market Operations Adjustments Earnings SEGMENT INCOME Elec
Slide 41: Reported to Adjusted Earnings Reconciliation, Three Months Ended September 30, 2021
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended September 30, 2021 (Dollars in millions, except per share amounts) Special Items Workplace and Reported Gas Pipeline Workforce Regulatory Total Adjusted Earnings Investments Realignment Settlements Adjustments Ea
Slide 42: Reported to Adjusted Earnings Reconciliation, Nine Months Ended September 30, 2021
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Nine Months Ended September 30, 2021 (Dollars in millions, except per share amounts) Special Items Workplace and Reported Gas Pipeline Workforce Regulatory Total Adjusted Earnings Investments Realignment Settlements Adjustments Ear
Slide 43: Effective Tax Reconciliation
DUKE ENERGY CORPORATION EFFECTIVE TAX RECONCILIATION September 2022 (Dollars in millions) Three Months Ended Nine Months Ended September 30, 2022 September 30, 2022 Effective Tax Effective Tax Balance Rate Balance Rate Reported Income From Continuing Operations Before Income Taxes $ 1,518 $ 3,281 Re
Slide 44: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2022 (In millions) Cash and Cash Equivalents $ 453 Less: Certain Amounts Held in Foreign Jurisdictions (7) Less: Unavailable Domestic Cash (54) 392 Plus: Remaining Availability under Master Credit Facilities and other fac
Slide 45: Reported to Adjusted Earnings Reconciliation, Three Months Ended December 31, 2021
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended December 31, 2021 (Dollars in millions, except per share amounts) Special Items Workplace and Reported Workforce Regulatory Discontinued Total Adjusted Earnings Realignment Settlements Operations Adjustments Earn