Duke Energy reports first quarter earnings - First quarter 2013 adjusted diluted earnings per share (EPS) were $1.02, compared to $1.13 for the first quarter 2012

- Reported diluted EPS for first quarter 2013 was $0.89, compared to $0.66 for the first quarter 2012

- Company affirms its 2013 adjusted earnings guidance range of $4.20 to $4.45 per share

CHARLOTTE, N.C., May 3, 2013 /PRNewswire/ -- Duke Energy (NYSE: DUK) today announced first quarter 2013 adjusted diluted EPS of $1.02, compared to $1.13 for first quarter 2012, and reported diluted EPS of $0.89, compared to $0.66 for the same period last year.

(Logo:  http://photos.prnewswire.com/prnh/20130322/CL81938LOGO )

Adjusted EPS for the quarter reflects the addition of earnings from Progress Energy, favorable weather and revised customer rates for Duke Energy Carolinas. These drivers helped mitigate the impact of share dilution from the merger and less favorable results from the company's Commercial Power and International Energy segments.

As expected, Commercial Power experienced lower results from the Midwest generation fleet primarily due to lower PJM capacity prices, while International Energy was negatively impacted by lower volumes and higher purchased power costs in Brazil due to a delay in the rainy season.

"Our first quarter earnings were consistent with our internal plan and we are affirming our 2013 earnings guidance range," said Jim Rogers, Duke Energy chairman, president and CEO. "Our operational performance was strong, as highlighted by our 97.1 percent nuclear capacity factor, reflecting our continuing focus on optimizing the performance of our nuclear fleet.

"We're 10 months into the merger with Progress Energy and we are pleased with the pace of our integration efforts. We are clearly on track to achieve our merger commitments, providing benefits for both customers and investors," he added. "As we move forward, our focus will remain on safety and operational excellence as we pursue our near-term priorities, including successfully concluding regulated rate cases in North Carolina, South Carolina and Ohio. We also are finalizing our remaining major construction projects, providing increased diversity to our generation mix for decades to come."

BUSINESS UNIT RESULTS

The discussion below of first-quarter 2013 financial results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 21 through 22 present a reconciliation of reported results to adjusted results.

U.S. Franchised Electric and Gas (USFE&G) 
USFE&G recognized first-quarter 2013 adjusted segment income of $656 million, compared to $344 million in the first quarter 2012, an increase of $0.44 per share.

USFE&G's increased results were primarily driven by the addition of Progress Energy's regulated utility operations in the Carolinas and Florida (+$0.35 per share).

Other drivers, excluding the addition of Progress Energy, included:

  • Favorable weather (+$0.10 per share) compared to 2012
  • Increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas in February 2012 (+$0.03 per share)
  • Increased wholesale revenues including new contracts (+$0.02 per share)

These results were partially offset by a change in effective tax rate (-$0.02 per share) and a decrease in AFUDC equity (-$0.02 per share) primarily due to the completion of certain major capital projects.

International Energy  
International Energy recognized first-quarter 2013 adjusted segment income of $97 million, compared to $142 million in the first quarter 2012, a decrease of $0.06 per share.

International Energy's quarterly results decreased primarily due to lower volumes and higher purchased power costs in Brazil as a result of a delay in the rainy season (-$0.03 per share), lower volumes and pricing at National Methanol Corporation (-$0.01 per share) and unfavorable foreign exchange rates primarily in Brazil (-$0.01 per share).

Commercial Power  
Commercial Power recognized first-quarter 2013 adjusted segment income of $6 million, compared to $30 million in the first quarter 2012, a decrease of $0.03 per share.

Commercial Power's quarterly results decreased primarily due to lower results from the Midwest coal and gas generation fleets (-$0.05 per share) driven primarily by lower PJM capacity revenues. These results were partially offset by favorable margins at Duke Energy Retail (+$0.01 per share).

Other 
On an adjusted basis, Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy's captive insurance company, other investments, and quarterly income tax levelization adjustments.

Other recognized first-quarter 2013 adjusted net expense of $43 million, compared to net expense of $10 million in the first quarter 2012, a difference of $0.05 per share. Other's results were primarily due to the addition of interest expense on Progress Energy holding company's corporate debt (-$0.04 per share) and increased Duke Energy holding company interest expense (-$0.02 per share).

Share Issuance 
On July 2, 2012, Duke Energy issued approximately 258 million shares of common stock in connection with the closing of the merger with Progress Energy Inc. The issuance of these additional shares had a dilutive impact of $0.41 per share on the quarter-over-quarter adjusted diluted EPS results.

Earnings Conference Call for Investors 
An earnings conference call for investors is scheduled for 10 a.m. ET Friday, May 3, to discuss Duke Energy's financial performance for the first quarter 2013 as well as providing other business updates. The conference call will be hosted by Jim Rogers, chairman, president and chief executive officer, and Lynn Good, executive vice president and chief financial officer.

The call can be accessed via the investors' section (http://www.duke-energy.com/investors) of Duke Energy's website or by dialing 877-723-9523 in the United States or 719-325-4929 outside the United States. The confirmation code is 9459861. Please call in 10 to 15 minutes prior to the scheduled start time.

A replay of the conference call will be available until 1 p.m. ET, May 13, 2013, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 9459861. A replay and transcript also will be available by accessing the investors' section of the company's website.

Special Items and Non-GAAP Reconciliation 
Special items affecting Duke Energy's adjusted diluted EPS for first quarter 2012 and first quarter 2013 include:

(In millions, except per-share amounts)

Pre-Tax Amount

Tax Effect

1Q2013 EPS Impact

1Q2012 EPS Impact

First Quarter 2013


Costs to Achieve, Progress Energy Merger

$(55)

$21

$(0.05)


Economic Hedges (Mark-to-Market)

$(75)

$27

$(0.08)


First Quarter 2012


Edwardsport Charges

$(420)

$152


$(0.60)

Costs to Achieve, Progress Energy Merger

$(8)

$2


$(0.01)

Voluntary Opportunity Plan deferral

$99

$(39)


$0.13

Economic Hedges (Mark-to-Market)

$2

$(1)


--

Discontinued operations, net of tax

--

$2


$0.01

Total diluted EPS impact



$(0.13)

$(0.47)

 

Reconciliation of reported to adjusted diluted EPS for the quarters:


1Q2013

EPS

1Q2012

EPS

Diluted EPS, as reported

$0.89

$0.66

Adjustments to reported EPS:



Diluted EPS impact of special items, mark-to-market in Commercial Power and discontinued operations

$0.13

$0.47

Diluted EPS, adjusted

$1.02

$1.13

 

NON-GAAP FINANCIAL MEASURES

The primary performance measure used by management to evaluate segment performance is segment income. Segment income is defined as income from continuing operations net of income attributable to non-controlling interests. In addition, direct interest expense and income taxes are included in segment income and certain governance costs are allocated to each of the segments.

Management believes segment income, which is the GAAP measure used to report segment results, is a good indicator of each segment's operating performance as it represents the approximate net income contribution of Duke Energy's business segments by incorporating the direct financing methods or capital structures of the business segments as well as the income tax attributes of the businesses and regions in which they operate.

Duke Energy's management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company. In addition, Duke Energy's management calculates the EPS impact of segment income drivers to facilitate an understanding of the impacts of each income driver on consolidated adjusted diluted EPS.

Special items represent certain charges and credits, which management believes will not be recurring on a regular basis, although it is reasonably possible such charges and credits could recur. Mark-to-market adjustments reflect the mark-to-market impact of derivative contracts, which is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting or regulatory accounting treatment, used in Duke Energy's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power, gas) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it provides them an additional relevant comparison of the company's performance across periods. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measure for adjusted diluted EPS is reported diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, which includes the impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of adjusted diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items and the mark-to-market impacts of economic hedges in the Commercial Power segment for future periods.

Duke Energy also uses adjusted segment income and adjusted Other net expenses as a measure of historical and anticipated future segment and Other performance. Adjusted segment income and adjusted Other net expenses are non-GAAP financial measures, as they represent reported segment income and Other net expenses adjusted for special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment income and adjusted Other net expenses provides useful information to investors, as it provides them an additional relevant comparison of a segment's or Other's performance across periods. When an EPS amount is provided for a segment income driver, the per share impact is derived by taking the before-tax amount of the item less income taxes based on Duke Energy's consolidated effective tax rate, divided by the Duke Energy weighted-average diluted shares outstanding for the period. The most directly comparable GAAP measure for adjusted segment income or adjusted Other net expenses is reported segment income or Other net expenses, which represents segment income and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

Duke Energy is the largest electric power holding company in the United States with more than $100 billion in total assets. Its regulated utility operations serve approximately 7.1 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at: www.duke-energy.com

Forward-Looking Information 
This release 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.

These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook" and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: state, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, as well as rulings that affect cost and investment recovery or have an impact on rate structures; the ability to recover eligible costs and earn an adequate return on investment through the regulatory process; the costs of retiring Duke Energy Florida's Crystal River Unit 3 could prove to be more extensive than is currently identified, all costs associated with the retirement Crystal River Unit 3 asset, including replacement power may not be fully recoverable through the regulatory process; the ability to maintain relationships with customers, employees or suppliers post-merger; the ability to successfully integrate the Progress Energy businesses and realize cost savings and any other synergies expected from the merger; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; the impact of compliance with material restrictions of conditions related to the Progress Energy merger imposed by regulators could exceed our expectations; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth or decline in the respective Duke Energy Registrants' service territories, customer base or customer usage patterns; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on each of the Duke Energy Registrants' operations, including the economic, operational and other effects of storms, hurricanes, droughts and tornadoes; the ability to successfully operate electric generating facilities and deliver electricity to customers; the ability to recover, in a timely manner, if at all, costs associated with future significant weather events through the regulatory process; the impact on the Duke Energy Registrants' facilities and business from a terrorist attack, cyber security threats and other catastrophic events; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate; unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints; the performance of electric generation facilities and of projects undertaken by Duke Energy's non-regulated businesses; the results of financing efforts, including the Duke Energy Registrants' ability to obtain financing on favorable terms, which can be affected by various factors, including the respective Duke Energy Registrants' credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy's defined benefit pension plans and nuclear decommissioning trust funds; the level of creditworthiness of counterparties to Duke Energy Registrants' transactions; employee workforce factors, including the potential inability to attract and retain key personnel; growth in opportunities for the respective Duke Energy Registrants' business units, including the timing and success of efforts to develop domestic and international power and other projects; construction and development risks associated with the completion of Duke Energy Registrants' capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from ratepayers in a timely manner or at all; the subsidiaries ability to pay dividends or distributions to Duke Energy Corporation holding company (the Parent); the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the impact of potential goodwill impairments; the ability to reinvest retained earnings of foreign subsidiaries or repatriate such earnings on a tax free basis; and the ability to successfully complete future merger, acquisition or divestiture plans.

Additional risks and uncertainties are identified and discussed in Duke Energy's and its subsidiaries' reports filed with the SEC and available at the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media Contact: Tom Shiel
Office: 704.382.2355 | 24-Hour: 800.559.3853
Analyst: Bob Drennan
Office: 704.382.4070
Analyst: Bill Currens
Office: 704.382.1603

 


DUKE ENERGY CORPORATION

EARNINGS VARIANCES

March 2013 YTD vs. Prior Year


















($ per share)


U.S. Franchised

Electric & Gas


International Energy


Commercial Power


Other


Consolidated


















2012 YTD Reported Earnings Per Share, Diluted


$

0.30


$

0.32


$

0.07


$

(0.04)


$

0.66

Costs to Achieve, Progress Merger



-



-



-



0.01



0.01

Edwardsport Charges



0.60



-



-



-



0.60

Voluntary Opportunity Plan Deferral



(0.13)



-



-



-



(0.13)

Economic Hedges (Mark-to-Market)



-



-



-



-



-

Discontinued Operations















(0.01)

2012 YTD Adjusted Earnings Per Share, Diluted


$

0.77


$

0.32


$

0.07


$

(0.03)


$

1.13


















Share Differential (a)



(0.28)



(0.12)



(0.03)



0.02



(0.41)


















2012 YTD Adjusted Earnings Per Share, Diluted, Recasted for Share Issuance


$

0.49


$

0.20


$

0.04


$

(0.01)


$

0.72


















Progress Energy Contribution



0.35



-



-



(0.04)



0.31


















Weather



0.10



-



-



-



0.10


















Pricing and Riders (b)



0.03



-



-



-



0.03


















Latin America, including Foreign Exchange Rates (c)



-



(0.05)



-



-



(0.05)


















National Methanol Company



-



(0.01)



-



-



(0.01)


















Midwest Coal Generation (d)



-



-



(0.02)



-



(0.02)


















Midwest Gas Generation (e)



-



-



(0.03)



-



(0.03)


















Duke Energy Retail 



-



-



0.01



-



0.01


















Interest Expense



-



-



0.01



(0.02)



(0.01)


















Change in effective income tax rate



(0.02)



-



-



-



(0.02)


















Other (f)



(0.02)



-



-



0.01



(0.01)


















2013 YTD Adjusted Earnings Per Share, Diluted


$

0.93


$

0.14


$

0.01


$

(0.06)


$

1.02

Costs to Achieve, Progress Merger



-



-



-



(0.05)



(0.05)

Economic Hedges (Mark-to-Market)



-



-



(0.08)



-



(0.08)

2013 YTD Reported Earnings Per Share, Diluted


$

0.93


$

0.14


$

(0.07)


$

(0.11)


$

0.89




































Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.


Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.


















(a)

Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy's weighted-average diluted common shares outstanding as a result of shares issued to complete

the merger with Progress Energy.  Weighted-average diluted shares outstanding increased from 446 million for the three months ended March 31, 2012, to 705 million for the three months ended

March 31, 2013.


















(b)

Primarily due to the timing of the implementation of revised customer rates in North and South Carolina as a result of the 2011 Duke Energy Carolinas rate case. The revised rates were in

implemented in February 2012, resulting in only two months of increased rates in quarter ended March 31, 2012, compared to three months in quarter ended March 31, 2013.


















(c) 

Primarily driven by higher average purchased power costs and lower volumes due to a delay in the rainy season (-$0.03) and unfavorable foreign exchange rates (-$0.01) in Brazil.


















(d)

Primarily due to lower capacity revenues received from PJM  (-$0.03).


















(e)

Primarily due to lower capacity revenue from PJM (-$0.03).


















(f)

Amount for U.S. Franchised Electric & Gas is primarily due to a decrease in AFUDC-equity (-$0.02), and increases in depreciation and amortization expense (-$0.01) and general taxes (-$0.01),

partially offset by higher wholesale revenue, including new contracts (+$0.02).

 

 

 


March 2013

QUARTERLY HIGHLIGHTS

(Unaudited)








Three Months Ended 



March 31,






(In millions, except per-share amounts and where noted)


2013


2012

COMMON STOCK DATA





Income from continuing operations attributable to Duke Energy Corporation common shareholders(a)





    Basic


$              0.89


$                       0.65

    Diluted


$              0.89


$                       0.65

Income from discontinued operations attributable to Duke Energy Corporation common shareholders(a)





    Basic


$                   -


$                       0.01

    Diluted


$                   -


$                       0.01

Net income attributable to Duke Energy Corporation common shareholders(a)





    Basic


$              0.89


$                       0.66

    Diluted


$              0.89


$                       0.66

  Dividends Declared Per Share(a)


$            0.765


$                       0.75

  Weighted-Average Shares Outstanding(a)





    Basic


705


446

    Diluted


705


446






SEGMENT INCOME BY BUSINESS SEGMENT





U.S. Franchised Electric and Gas(b)


$               656


$                        136

Commercial Power


(42)


31

International Energy


97


142

Total Reportable Segment Income


711


309

Other Net Expense


(77)


(16)

Income from Discontinued Operations, net of tax


-


2

Net Income Attributable to Duke Energy Corporation


$               634


$                        295






CAPITALIZATION





Total Common Equity


50%


53%

Total Debt


50%


47%






Total Debt


$          41,350


$                   20,550

Book Value Per Share(a)


$            58.14


$                     51.29

Actual Shares Outstanding(a)


706


446






CAPITAL AND INVESTMENT EXPENDITURES





U.S. Franchised Electric and Gas


$            1,309


$                        795

Commercial Power


25


209

International Energy


12


15

Other


64


24






Total Capital and Investment Expenditures


$            1,410


$                     1,043











(a) Reflects the impact of the 1-for-3 reverse stock split on July 2, 2012.





(b) Includes impairment and other charges of $268 million in the first quarter of 2012 related to the Edwardsport IGCC project (net of tax of $152 million).