Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Merger or Acquisition (January 2011)
41 slides from Duke Energy Corporation (Holding Company)'s merger presentation, Jan 10, 2011
Slide 1: Creating the Leading U.S. Utility
OH IN KY NC SC FL CREATING THE LEADING U.S. UTILITY January 10, 2011
Slide 2: Safe Harbor
Safe Harbor SAFE HARBOR STATEMENT This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements are typically identified by words or phrases such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project
Slide 3: Safe Harbor (cont'd)
Safe Harbor (cont’d) ADDITIONAL INFORMATION AND WHERE TO FIND IT This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, sol
Slide 4: Safe Harbor (cont'd) - Reg G Disclosure
Safe Harbor (cont’d) REG G DISCLOSURE In addition, today's discussion includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available on our Investor Relations websites at www.duke-energy.co
Slide 5: Agenda
Agenda Transaction Overview Company Highlights Financial Summary Closing Creating the Leading U.S. Utility – January 10, 2011
Slide 6: Transaction Overview
Transaction Overview Creating the Leading U.S. Utility – January 10, 2011
Slide 7: Compelling Strategic Transaction
Compelling Strategic Transaction Creates largest U.S. utility, supported by substantial, diversified regulated earnings and cash flows Unmatched financial and operational scale, scope and strength Principally regulated earnings base supports dividend Significant scale of operating cash flows
Slide 8: Compelling Strategic Transaction (cont'd)
Compelling Strategic Transaction (cont’d) Earnings accretive in year one1 Attractive total shareholder return proposition supported by strong dividend Investor Benefits Maintain Duke Energy dividend and policy Significant rate base growth expected to drive 4-6% long-term EPS growth1 Strong
Slide 9: Creating the Largest U.S. Utility
Creating the Largest U.S. Utility The combined company will create the largest U.S. utility, with unmatched scale and scope Diverse Service Territories Combined Statistics Duke Progress Energy Energy Combined Rank OH OH IN IN Enterprise Value $40.2 B $25.1 B $65.3 B #1 KY KY NC Market Cap. $23.6 B
Slide 10: Key Transaction Terms
Key Transaction Terms Company Name Duke Energy Corporation 100% stock Consideration 2.6125 shares of Duke Energy per Progress Energy share Corporate: Charlotte; significant presence in Raleigh Headquarters Utilities: No change Duke Energy shareholders: 63% Pro Forma Ownership Progress
Slide 11: Duke Energy Transaction Rationale
Duke Energy Transaction Rationale Transaction Rationale IN OH Investor and strategic benefits KY EPS accretive in year one¹ SC NC Creates unmatched financial and operational scale, scope and strength Poised for strong growth and economic recovery Progress Energy Expanded U.S. regulated ear
Slide 12: Progress Energy Transaction Rationale
Progress Energy Transaction Rationale Transaction Rationale OH IN Investor and strategic benefits KY 7.1% premium to Progress Energy shareholders¹ NC Dividend and EPS accretive in year one² SC Improved EPS & dividend growth Duke Energy Increased regulatory and earnings diversity in six ser
Slide 13: Highly Experienced Leadership Team
Highly Experienced Leadership Team Jim Rogers 18 Member Board of Directors Executive Chairman Chief Integration Officers Bill Johnson A.R. Mullinax President & CEO Paula Sims Lynn Good Dhiaa Jamil Chief Financial Officer Nuclear Generation Marc Manly Jeff Lyash General Counsel Energy Supply Mark Mul
Slide 14: Indicative Timeline to Close and Regulatory Approvals
Indicative Timeline to Close and Regulatory Approvals Q1 2011 Q2 2011 Q3 2011 Q4 2011 Duke Energy and Progress Merger announcement Energy shareholder meetings Make regulatory filings North Carolina, Secure appropriate state and South Carolina, federal regulatory approvals U.S. DOJ, FERC, and NRC Fil
Slide 15: Company Highlights
Company Highlights Creating the Leading U.S. Utility – January 10, 2011
Slide 16: The Leading U.S. Utility
The Leading U.S. Utility Enterprise Value ($ B) $65.3 #1 U.S. utility by enterprise value $52.7 $41.6 $41.5 $40.2 $37.8 $35.0 $33.6 $32.5 $65.3 B enterprise value $25.1 $24.9 $23.6 24% larger than the #2 utility PF DUK SO D NEE DUK EXC AEP FE/AYE PCG PGN PEG ETR $90.6 B in total assets1 Mark
Slide 17: Attractive, Diversified Operations
Attractive, Diversified Operations Presence in six attractive growth service territories with constructive regulatory traditions More electric customers than any other U.S. utility, serving 7.1 M domestic regulated electric customers Diverse Service Territories Customer Diversity: 7.1 M regulate
Slide 18: U.S. Generation Diversity
U.S. Generation Diversity Highly diversified generation capacity and fuel profile Capacity and fuel diversity projected to increase, migrating the combined fleet to greater gas and less coal exposure By Owned Capacity: 57 GW¹ Duke Energy Progress Energy Combined Hydro/Wind Hydro/Wind Hydro/Wind
Slide 19: U.S. Generation Well Positioned for Pending Environmental Regulations
U.S. Generation Well Positioned for Pending Environmental Regulations Generation Capacity by Technology (GW / %) Duke Energy Combined Scrubbed Coal Scrubbed Coal 12.9 GW / 36% Unscrubbed Coal 17.6 GW / 31% Unscrubbed Coal 4.0 GW / 11% 6.6 GW / 11% Non-Emitting¹ Gas/Oil Non-Emitting¹ 9.1 GW / 26% 9.4
Slide 20: Nuclear Generation Overview
Nuclear Generation Overview Combined Nuclear Generation Fleet Combination creates the largest U.S. regulated nuclear fleet 7 stations and 12 units with ~9 GW of owned generation Commitment to top quartile operational performance for nuclear Catawba Harris fleet McGuire Combination of nuclear
Slide 21: Financial Summary
Financial Summary Creating the Leading U.S. Utility – January 10, 2011
Slide 22: Pro Forma Earnings Profile
Pro Forma Earnings Profile Accretive to earnings1 in the first year after close Joint dispatch and fuel savings will immediately benefit Carolinas’ customers ($600 - 800 M from 2012 - 2016) Non-fuel merger benefits help achieve first year earnings accretion No equity issuance requirements as
Slide 23: Predominantly Regulated Earnings Base and Cash Flows
Predominantly Regulated Earnings Base and Cash Flows Regulated EBIT contribution of the combined operations will be approximately 85% Duke Energy is committed to growing its strong regulated earnings base Business Mix Duke Energy Progress Energy Combined Commercial Commercial Power Regulated Pow
Slide 24: Attractive Rate Base Growth
Attractive Rate Base Growth Projected Capital Expenditures ($ B) Projected Rate Base ($ B) Regulated Maintenance Regulated Grow th Progress Energy Duke Energy Non-Regulated Discretionary Range $49 $46 $8 $8 $40 $1 $1 $7 $1 $1 $29 $27 $1 $23 $4 $3 $2 Illustrative $17 $19 $20 $3 $3 $3 2010E 2011E 2012
Slide 25: Attractive Dividend Policy
Attractive Dividend Policy Duke Energy dividend and policy to be maintained Continued growth in dividend at a rate slower than growth of adjusted diluted EPS Targeting a long-term payout range of 65% to 70%1 Attractive payout and yield underscores compelling shareholder value proposition D
Slide 26: Strong Credit Quality and Liquidity
Strong Credit Quality and Liquidity Highly committed to Duke Energy’s current strong credit ratings Lower overall risk profile resulting from increased regulated earnings base and cash flows Strong balance sheet strength with $91 B in total assets1 Increased regulatory diversity with presenc
Slide 27: Shareholder Value Track Record
Shareholder Value Track Record Total Shareholder Return (%) 1 year 3 year 5 year 44.2% 32.3% 20.9% 15.1% 12.6% 12.0% 9.5% 7.9% 5.7% 4.7% (8.3%) (15.4%) Duke Progress Duke Progress Duke Progress S&P 500 UTY Energy Energy S&P 500 UTY Energy Energy S&P 500 UTY Energy Energy Source: Bloomberg as of 12/3
Slide 28: Closing
Closing Creating the Leading U.S. Utility – January 10, 2011
Slide 29: Summary Highlights
Summary Highlights Creates largest U.S. utility, supported by substantial, diversified regulated earnings and cash flows Unmatched financial and operational scale, scope and strength Principally regulated earnings base supports dividend Significant scale of operating cash flows Leverages “
Slide 30: Appendix
Appendix Creating the Leading U.S. Utility – January 10, 2011
Slide 31: Simplified Financing Structure by Legal Entity
Simplified Financing Structure by Legal Entity Duke Energy (HoldCo) Cinergy Corp. Duke Energy Progress Energy (HoldCo) International (HoldCo) Duke Energy Duke Energy Duke Energy Progress Energy Progress Energy Carolinas Ohio Indiana Carolinas Florida Duke Energy Issuer Legend Other Non-Reg Commercia
Slide 32: Duke Energy - Summary of Major Capital Projects
Duke Energy – Summary of Major Capital Projects Edwardsport – Indiana US FE&G Major Construction Projects¹ ($ M) 618 MW IGCC facility expected in-service in 2012 Spent as of 09/30/10 Estimated expenditures to complete project Project status (as of 09/30/10) Overall project: 74% complete $855
Slide 33: Progress Energy - Summary of Major Capital Projects
Progress Energy – Summary of Major Capital Projects Richmond County CCGT – North Carolina Progress Energy Major Construction Projects¹ ($ M) 635 MW combined-cycle gas-fired plant Spent as of 09/30/10 Estimated expenditures to complete project Expected in-service in June 2011 Lee CCGT – North Car
Slide 34: Dividend Accretion to Progress Energy - Illustrative Example
Dividend Accretion to Progress Energy – Illustrative Example Example calculation of Progress Energy dividend based on Duke Energy’s current annual dividend per share Pro Forma 1-for-2 Current Stock Split1 Duke Energy annual dividend $0.98 $1.96 Multiplied by: exchange ratio 2.6125x 1.30625x Progress
Slide 35: Creating the Leading U.S. Utility - January 10, 2011
Creating the Leading U.S. Utility – January 10, 2011
Slide 36: Duke Energy Corporation Non-GAAP Financial Measures
Duke Energy Corporation Non-GAAP Financial Measures Creating the Leading U.S. Utility January 10, 2011 Adjusted Diluted EPS Outlook The materials for the Duke Energy and Progress Energy presentation “Creating the Leading U.S. Utility” on January 10, 2011 include a discussion of Duke Energy’s origina
Slide 37: Adjusted Earnings Per Share Accretion in Year One
Adjusted Earnings Per Share Accretion in Year One The materials for the Duke Energy and Progress Energy presentation “Creating the Leading U.S. Utility” on January 10, 2011 include a discussion of Duke Energy’s assumption that the merger transaction is anticipated to be accretive in the first year a
Slide 38: Dividend Payout Ratio
Dividend Payout Ratio The materials for the Duke Energy and Progress Energy presentation “Creating the Leading U.S. Utility” on January 10, 2011 include a discussion of Duke Energy’s anticipated long-term dividend payout ratio of 65- 70%, based upon adjusted diluted EPS. This payout ratio is a non-G
Slide 39: Progress Energy, Inc. Non-GAAP Financial Measures
Progress Energy, Inc. Non-GAAP Financial Measures Creating the Leading U.S. Utility January 10, 2011 Ongoing Earnings Per Share 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 belie
Slide 40: Discontinued Operations
Discontinued Operations The company has reduced its business risk by exiting nonregulated businesses to focus on the core operations of the utilities. Due to disposition of these assets management does not view this activity as representative of the company’s fundamental core earnings
Slide 41: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of September 30, 2010 (In millions) Cash and Cash Equivalents $1,808 Less: Amounts Held in Foreign Jurisdictions (668) $1,140 Plus: Remaining Availability under Master Credit Facility 2,496 Total Available Liquidity as of September 30, 20