Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q2 2006 Earnings Presentation
28 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Aug 3, 2006
Slide 1: Second Quarter Earnings Review
Second Quarter Earnings Review August 3, 2006 Jim Rogers President and Chief Executive Officer David Hauser Group Executive and Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additiona
Slide 3: Earnings Summary
Earnings Summary 2Q06 2Q05 DUK Reported Earnings per Diluted Share $ 0.28 $ 0.32 Special Items 0.09 (0.02) Discontinued Operations 0.06 0.02 DUK Ongoing Earnings per Diluted Share $ 0.43 $ 0.32 • Strong results from ongoing businesses, on track to achieve employee incentive target • Major strategic
Slide 4: U.S. Franchised Electric & Gas
U.S. Franchised Electric & Gas • Segment EBIT increased Reported & Ongoing Segment EBIT by $77 million over 2Q05 ($ millions) • The addition of Cinergy’s 2Q06 2Q05 regulated utilities in the Reported Segment EBIT $ 351 $ 274 Midwest contributed $90 million, net of $10 million in Special Items - - ra
Slide 5: Natural Gas Transmission
Natural Gas Transmission • EBIT increase primarily due to Reported & Ongoing Segment EBIT a $46 million increase in natural ($ millions) gas processing margins 2Q06 2Q05 Mainly due to the addition of the Reported Segment EBIT $ 361 $ 304 Empress system Special Items - - Strong processing results
Slide 6: Field Services – Comparison to Pro-Forma 2005 Results
Field Services – Comparison to Pro-Forma 2005 Results ($ millions) DEFS Net Income - 100% $ 232 Current Duke Energy Ownership 50% Pro-Forma Ongoing Equity Earnings 2Q05 $ 116 Ongoing Equity Earnings 2Q06 $ 148 Increase 2005 to 2006 +28% Second Quarter Earnings Review August 3, 2006 6
Slide 7: Field Services
Field Services • Represents Duke Energy’s Reported & Ongoing Equity Earnings/EBIT 50% ownership in Duke ($ millions) Energy Field Services 2Q06 2Q05 • Strong commodity prices and Reported Equity Earnings/EBIT $ 148 $ 164 improved natural gas and NGL marketing results more than Special Items - (22) o
Slide 8: Commercial Power
Commercial Power • Commercial Power segment Reported & Ongoing Segment EBIT includes non-regulated generation ($ millions) assets in the Midwest and Duke 2Q06 2Q05 Energy Generation Services Reported Segment EBIT $ 20 $ (16) • Segment earnings improved by Special Items - - $36 million over 2Q05 Ongo
Slide 9: International Energy
International Energy • Ongoing earnings were slightly Reported & Ongoing Segment EBIT lower due to an unplanned ($ millions) outage in Peru which increased 2Q06 2Q05 purchased power costs and by lower hydrology in Peru and Brazil Reported Segment EBIT $ 26 $ 86 • Favorable currency impacts of Specia
Slide 10: Crescent Resources
Crescent Resources • Sharp increase in results for Reported & Ongoing Segment EBIT ($ millions) segment EBIT was due to two major sales during the quarter: 2Q06 2Q05 $52 million gain on sale of property Reported Segment EBIT $ 174 $ 38 at Lake Keowee in South Carolina Special Items - - $81 milli
Slide 11: Other
Other • Ongoing losses in second Reported & Ongoing EBIT quarter 2006 improved by ($ millions) $17 million 2Q06 2Q05 • Special Items for 2Q06 include: Other Reported EBIT $ (174) $ (102) $74 million for Cinergy merger costs-to-achieve, primarily Special Items 82 (7) associated with severance costs
Slide 12: Other Items
Other Items • Cash, cash equivalents and short-term investments were approximately $1 billion, as of June 30 Total outstanding commercial paper as of June 30 was $1.2 billion • Interest expense for the quarter was about $44 million higher than last year, primarily due to the Cinergy merger and par
Slide 13: Commitment to Investors
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of our portfolio Reinvesting in the business Developing a strong leadership team with a deep bench Delivering clear and transparent communications Second Quarter Earnin
Slide 14: Commitment to Investors: Growing earnings and dividends
Commitment to Investors Focused on what matters most to you: • Closed Cinergy merger Growing earnings and • Strong results for 2nd quarter dividends over time • Board increased annual Achieving the full value of dividend by $0.04 to $1.28, effective with September our portfolio distribution Reinv
Slide 15: Commitment to Investors: Achieving full value of portfolio
Commitment to Investors Focused on what matters most to you: • Closed sale of DENA assets Growing earnings and • Disposition of final DENA dividends over time contracts Achieving the full value of • Announced sale of CMT our portfolio • Pursuing partner for Crescent Reinvesting in the business •
Slide 16: Commitment to Investors: Reinvesting in the business
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of our portfolio • Rockingham acquisition approved by NCUC Reinvesting in the business • Filed testimony on a new coal Developing a strong plant in North Carolina leader
Slide 17: Active Natural Gas Projects
Active Natural Gas Projects Pine River West Doe Plant St. Clair Power Dawn Delivery Enhancement Dawn Area Canaport Storage Dawn-Trafalgar Phase 1 – 3 Cape Cod Excelerate NE Gateway Islander East Time II Ramapo Lebanon East / BP Logan TEMAX Accident Mid-Continent Jewell Ridge Crossing Piedmont Egan E
Slide 18: Commitment to Investors: Strong leadership team
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of our portfolio Reinvesting in the business • Gas Company Developing a strong Strong team announced with leadership team with a the decision to spin deep bench • Duke
Slide 19: Commitment to Investors: Clear communications
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of • Updated Merger Scorecard will our portfolio be shared in November with third quarter results Reinvesting in the business • Commitment to share timely Developing a s
Slide 20: Value Proposition
Value Proposition We are committed to shareholder value: • Long-term earnings growth after spinoff of gas business Duke Energy expected 4-6% ongoing EPS growth Gas company expected 5-7% ongoing EPS growth • Dividend growth Duke Energy estimated 70-75% payout target Gas company estimated 60%
Slide 21: Slide 21
Slide 22: Ongoing Diluted EPS and 2006 Employee Incentive Target Measure
Ongoing Diluted Earnings-per-share (“EPS”) and 2006 Employee Incentive Target Measure The slides and prepared remarks for Duke Energy’s August 3, 2006, earnings review include a discussion of the company's 2006 Employee EPS incentive target of $1.90. This EPS measure is used for employee incentive b
Slide 23: Ongoing Segment EBIT Non-GAAP Notes
certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing segment EBIT is reported segment EBIT, which represents EBIT from continuing operations, including any “special items.” Due to the forward-looking nat
Slide 24: Ongoing to Reported Earnings Reconciliation June 2005 Quarter-to-date
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION June 2005 Quarter-to-date (Dollars in Millions) Special Items (Note 1) MTM change on Discontinued Field Services de-designated Operations, hedge de- Field Services excluding Ongoing designation, hedges for 2005, Crescent Total Repor
Slide 25: Ongoing to Reported Earnings Reconciliation June 2006 Quarter-to-date
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION June 2006 Quarter-to-date (Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Costs to Impairment of Achieve, Ongoing Achieve, Campeche Anticipated Gas Discontinued Total Reported Earnings Cinergy Merger
Slide 26: Ongoing to Reported Earnings Reconciliation June 2005 Year-to-date
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION June 2005 Year-to-date (Dollars in Millions) Special Items (Note 1) MTM change on Discontinued Mutual Field Services de-designated Operations, insurance Gains on sales hedge de- Field Services excluding Ongoing liability of equity d
Slide 27: Ongoing to Reported Earnings Reconciliation June 2006 Year-to-date
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION June 2006 Year-to-date (Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Costs to Net Gain on Impairment of Achieve, Ongoing Achieve, Cinergy Settlement of Gain on Sales Campeche Anticipated Discontinue
Slide 28: Pro-Forma Equity Earnings for the Field Services Segment - 2Q 2005
Duke Energy Corporation Pro-Forma Equity Earnings for the Field Services Segment - 2Q 2005 Non-GAAP Reconciliation for SEC Regulation G The slides and prepared remarks for Duke Energy's August 3, 2006 earnings review include a discussion of pro-forma equity earning for the Field Services segment for