Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q1 2018 Earnings Presentation
41 slides from Duke Energy Corporation (holding Company)'s earnings presentation, May 10, 2018
Slide 1: First Quarter Earnings Review and Business Update
FIRST QUARTER EARNINGS REVIEW AND BUSINESS UPDATE MAY 10, 2018 PRESENTED BY: LYNN GOOD | CHAIRMAN, PRESIDENT AND CEO STEVE YOUNG | EXECUTIVE VP AND CFO
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
Slide 3: Topics for today's call
Topics for today’s call BUSINESS UPDATE Lynn Good, Chairman, President & CEO • First quarter 2018 financial and operational highlights • Update on key regulatory activity • Progress on strategic investments 4 -6% HIGHLY FINANCIAL UPDATE ACHIEVABLE EPS GROWTH Steve Young, Executive VP & CFO THROUGH 2
Slide 4: First quarter 2018 update
First quarter 2018 update $0.88 FINANCIAL HIGHLIGHTS REPORTED DILUTED EPS FOR 1Q 2018 • Ongoing investments and regulatory activity driving COMPARED TO strong growth in the electric and gas utilities $1.02 IN 1Q 2017 • Solid customer and volume growth across the jurisdictions • Equity offering compl
Slide 5: Update on our regulatory activity
Update on our regulatory activity STATUS UPDATE KEY CONSIDERATIONS • Partial settlement approved without modification • Including 9.9% ROE on 52% equity DUKE ENERGY Rate case order received Feb. 23 • Deferred coal ash costs amortized over 5 years, with full PROGRESS NORTH CAROLINA New rates effe
Slide 6: Advancing our efforts to generate cleaner energy
Advancing our efforts to generate cleaner energy W.S. Lee Combined Cycle Gas Turbine project Duke Energy Carolinas ELECTRIC UTILITIES & INFRASTRUCTURE • W.S. Lee CCGT in service April 5 (DEC) • Citrus County CCGT on track for 2018 CODs (DEF) • Filed for $200 million revenue increase under GBRA • Wes
Slide 7: Making progress on our natural gas infrastructure investments
Making progress on our natural gas infrastructure investments GAS UTILITIES & INFRASTRUCTURE • Atlantic Coast Pipeline (ACP) • Completed 200 miles of tree felling through March • Construction on compressor stations in W.Va. and N.C. underway EXPAND NATURAL GAS • Requested FERC approval for full cons
Slide 8: 1Q 2018 adjusted diluted EPS summary and primary drivers
1Q 2018 adjusted diluted EPS summary and primary drivers SEGMENT RESULTS VS. PRIOR YEAR QUARTER (1) ADJUSTED DILUTED Electric Utilities & Infrastructure, +$181 M (+$0.26 per share) EARNINGS PER SHARE ▲ Return to normal weather (+$0.16) ▲ Higher retail revenues from increased volumes and pricing and
Slide 9: Customer growth and weather-normal electric volume trends
Customer growth and weather-normal electric volume trends Rolling 12-Month Retail Electric Volume Growth RESIDENTIAL • Continued population migration into the Southeast drives 1.9% volume growth for electric and gas utilities • Positive electric usage per customer in the quarter 0.6% • Housing permi
Slide 10: Tax reform dockets proceeding across our state jurisdictions
Tax reform dockets proceeding across our state jurisdictions ELECTRIC & GAS UTILITIES MIDWEST SERVICE TERRITORIES Indiana Riders incorporate lower tax rate as they are filed (Electric) • Remaining impacts to be determined in generic docket Ohio Riders incorporate lower tax rate as they are filed
Slide 11: Committed to the strength of the balance sheet
Committed to the strength of the balance sheet PRIMARY EQUITY FINANCING PLAN ON TRACK… CREDIT METRICS • $2 billion equity issuance target in 2018 FFO/DEBT HOLDCO DEBT % • $1.6 billion equity offering completed March 9 with Target: 15 - 16% Target: Low 30%’s forwards to be unwound in 2018, timed to c
Slide 12: Reaffirming long-term earnings growth guidance
Reaffirming long-term earnings growth guidance REAFFIRMING LONG TERM GROWTH CAGR OF 4-6%THROUGH 2022 OFF OF MIDPOINT OF ORIGINAL 2017 GUIDANCE RANGE ($4.60) 2019 6% CAGR EXPECT LOW END OF THE GROWTH CAGR RANGE OFF OF $4.60 4% CAGR 2020 AND $4.85 BEYOND EXPECT MID TO HIGH END $4.60 OF THE GROWTH CAGR
Slide 13: Our investor value proposition
Our investor value proposition A SOLID LONG-TERM HOLDING 4.6% ~8-10% 4 -6% DIVIDEND YIELD(1) zzz ATTRACTIVE HIGHLY WITH DIVIDEND RISK-ADJUSTED ACHIEVABLE GROWTH TOTAL SHAREHOLDER EPS GROWTH COMMITMENT(2) RETURN(3) THROUGH 2022(4) SUPPORTED BY THE STRENGTH OF OUR BALANCE SHEET (1) As of May 8, 2018 (
Slide 14: Appendix materials
Appendix materials Item Slide(s) Update on key 2018 assumptions 15-17 1Q 2018 supplemental data 18-21 Tax reform summary 22-23 Financial supplement 24-28 Other information 29-33 FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 14
Slide 15: Update on key 2018 assumptions
Update on key 2018 assumptions FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 15
Slide 16: Key 2018 adjusted earnings guidance assumptions
Key 2018 adjusted earnings guidance assumptions ($ in millions) Original 2018 2018 YTD Assumptions (1) (thru 3/31/2018) Adjusted segment income/(expense) (2): Electric Utilities & Infrastructure $3,304 $816 Gas Utilities & Infrastructure $319 $158 Commercial Renewables $117 $20 Other ($383) ($95) Du
Slide 17: Key 2018 earnings sensitivities
Key 2018 earnings sensitivities Driver EPS Impact 1% change in earned return on equity +/- $0.45 Electric Utilities & $1 billion change in rate base +/- $0.07 Infrastructure 1% change in Electric Utilities volumes +/- $0.12 1% change in earned return on equity +/- $0.05 Gas Utilities & $200 million
Slide 18: 1Q 2018 supplemental data
1Q 2018 supplemental data FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 18
Slide 19: 1Q 2017 - 1Q 2018 adjusted diluted EPS waterfall
1Q 2017 - 1Q 2018 adjusted diluted EPS waterfall Electric Utilities & Gas Utilities Commercial 1Q Weather Impact Other Infrastructure & Infrastructure Renewables $0.03 ($0.01) ($0.04) $0.10 $1.32 ▼ Lower wind $1.30growth ▲ Customer $0.16 resource $1.28 ▼ Higher interest $1.28 and increased -$0.01 ex
Slide 20: Electric utilities quarterly weather impacts
Electric utilities quarterly weather impacts Weather segment 2018 2017 income to normal: Pretax impact Weighted avg. EPS impact – Pretax impact Weighted avg. EPS impact – diluted shares favorable / shares favorable / (unfavorable) (unfavorable) First Quarter $13 701 $0.01 ($175) 700 ($0.15) Second Q
Slide 21: Weather normalized volume trends, by electric jurisdiction
Weather normalized volume trends, by electric jurisdiction Rolling Twelve Months, as of Mar. 31, 2018 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Electric Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 3.2% 2.2% 1.9% 1.5% 1.4% 1.0% 0.8% 0.7% 0.6% 0.4% 0.2% 0.4% 0.3% 0.1%
Slide 22: Tax reform summary
Tax reform summary FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 22
Slide 23: Tax reform: regulatory activity and timeline
Tax reform: regulatory activity and timeline Riders in all jurisdictions include the lower federal income tax rate as they are updated/filed Proposed/Approved Treatment of: Amortization period for Status Docket Lower tax rate EDIT Unprotected EDIT Received Commission approval to utilize tax change t
Slide 24: Financial supplement
Financial supplement FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 24
Slide 25: Credit metric considerations
Credit metric considerations FFO/DEBT CALCULATION(1) KEY ADJUSTMENTS FFO (numerator) Coal ash ARO spend Net cash provided by operating activities (GAAP) • Treated as operating cash flow for GAAP, but deferred (+/-) Changes in working capital for future recovery for regulatory purposes (-) Capitalize
Slide 26: 2018 financing plan as of March 31, 2018
2018 financing plan as of March 31, 2018 (1)(2) ($ in millions) $2,500 $2,000 $1,500 $1,000 $500 $- Holding Duke Duke Duke Duke Piedmont Renewables Company Energy Energy Energy Energy Carolinas Progress Florida Kentucky 2018 Maturities and Debt Reduction / Expected/Completed Debt Issuances / Expecte
Slide 27: 2018 long-term debt financing activity as of March 31, 2018
2018 long-term debt financing activity as of March 31, 2018 Credit Ratings Amount Entity Date Issued (M/S&P, unless Term Type Rate ($ in millions) otherwise noted) $500 DE Carolinas March 2018 Aa2/A 5-Year First Mortgage Bond Fixed – 3.05% $500 DE Carolinas March 2018 Aa2/A 30-Year First Mortgage Bo
Slide 28: Liquidity summary as of March 31, 2018
Liquidity summary as of March 31, 2018 ($ 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) $ 2,650 $ 1,550 $ 1,250 $ 800 $ 600 $ 300 $ 150 $ 700 $ 8,
Slide 29: Other information
Other information FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 29
Slide 30: Upcoming events
Upcoming events Event Date 2018 AGA Financial Forum May 20-21, 2018 2Q 2018 earnings call (tentative) August 2, 2018 3Q 2018 earnings call (tentative) November 2, 2018 FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 30
Slide 31: Investor relations contact information
Investor relations contact information MIKE CALLAHAN, VICE PRESIDENT INVESTOR RELATIONS Michael.Callahan@duke-energy.com (704) 382-0459 MIKE SWITZER, DIRECTOR INVESTOR RELATIONS Mike.Switzer@duke-energy.com (704) 382-6473 ABBY MOTSINGER, MANAGER INVESTOR RELATIONS Abby.Motsinger@duke-energ
Slide 32: 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
Slide 33: For additional information on Duke Energy, please visit
For additional information on Duke Energy, please visit: www.duke-energy.com/investors FIRST QUARTER 2018 EARNINGS REVIEW AND BUSINESS UPDATE 33
Slide 34: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations First Quarter Earnings Review & Business Update May 10, 2018 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) First Quarter Earnings Review and Business Update on May 10, 2018, include a discussion of
Slide 35: Adjusted Segment Income and Adjusted Other Net Loss
Adjusted Segment Income and Adjusted Other Net Loss The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 10, 2018, include a discussion of adjusted segment income and adjusted other net expense for the quarter ended March 31, 2018 and a discussion of forecasted ad
Slide 36: Holdco Debt Percentage
Holdco Debt Percentage The materials for Duke Energy’s First Quarter Earnings Review and Business Update on May 10, 2018 include a reference to a projected Holdco debt percentage. This percentage reflects a non-GAAP financial measure. The numerator of the Holdco debt percentage is the balance of Duk
Slide 37: Reported to Adjusted Earnings Reconciliation, Three Months Ended March 31, 2018
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2018 (Dollars in millions, except per-share amounts) Special Items Costs to Impairment Achieve Sale of of Equity Reported Piedmont Regulatory Retired Method Impacts of Total Adjusted Earnings Merger Set
Slide 38: Reported to Adjusted Earnings Reconciliation, Three Months Ended March 31, 2017
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Three Months Ended March 31, 2017 (Dollars in millions, except per-share amounts) Special Item Reported Costs to Achieve Adjusted Earnings Piedmont Merger Earnings SEGMENT INCOME Electric Utilities and Infrastructure $ 635 $ — $ 63
Slide 39: Adjusted Effective Tax Reconciliation
DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION March 2018 (Dollars in millions) Three Months Ended March 31, 2018 Balance Effective Tax Rate Reported Income From Continuing Operations Before Income Taxes $ 803 Costs to Achieve Piedmont Merger 17 Regulatory Settlements 86 Sale of Retir
Slide 40: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of March 31, 2018 (In millions) Cash and Cash Equivalents $ 421 Less: Certain Amounts Held in Foreign Jurisdictions (6) Less: Unavailable Domestic Cash (105) 310 Plus: Remaining Availability under Master Credit Facilities and other facili
Slide 41: FFO to Debt Calculation
FFO to Debt Calculation Duke Energy Corporation (in millions) Years Ended December 31, 2017 2016 Actual Actual Cash From Operations $ 6,634 $ 6,817 Working capital adjustment (1) 740 (394) Capitalized Interest (128) (100) CR3 securitization adjustment (53) (35) Other 20 19 Funds From Operations 7,21