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Duke Energy
Duke Energy reports first quarter 2017 financial results



May 10, 2017

Duke Energy announced first quarter 2017 reported diluted EPS, prepared in accordance with Generally Accepted Accounting Principles (GAAP) of $1.02, compared to $1.01 for the first quarter of 2016. Duke Energy's first quarter 2017 adjusted diluted EPS was $1.04, compared to $1.13 for the first quarter 2016.

Adjusted diluted EPS excludes the impact of certain items included in GAAP reported diluted EPS. Amounts excluded from adjusted diluted EPS are primarily costs to achieve the Piedmont Natural Gas merger.

Adjusted diluted EPS for the first quarter of 2017 was lower than the prior year, primarily due to the absence of International Energy, which was sold in December 2016, and warm winter weather. Partially offsetting these drivers were the contributions of Piedmont Natural Gas and favorable operations and maintenance (O&M) expense at Electric Utilities and Infrastructure.

Based upon the results through the first quarter, the company remains on track to achieve its 2017 adjusted diluted earnings guidance range of $4.50 to $4.70 per share.

"We have a compelling strategy to deliver value to our stakeholders, and we are making good progress against our plan," said Lynn Good, Duke Energy chairman, president and CEO, "We recently announced Power/Forward Carolinas, our 10-year grid modernization plan in North Carolina. This program and others like it will not only strengthen the energy grid, but will also stimulate economic development and job growth in our communities and provide additional benefits for our customers."

"Our ongoing investments drove solid growth in our electric and gas utilities in the quarter, and we are responding to warm winter weather through disciplined cost management and operational efficiency. We remain on-track for 2017 and have affirmed our full-year guidance range."

Business segment results

In addition to the following summary of first quarter 2017 business segment performance, a comprehensive table with detailed earnings per share drivers for the first quarter 2017, compared to prior year, is provided on page 17.

The discussion below of the first quarter results includes both GAAP segment income and adjusted segment income, which is a non-GAAP financial measure. The tables on pages 8 and 9 present a reconciliation of GAAP reported results to adjusted results.

Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016, Duke Energy's segment structure has been realigned to include the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy's operations is presented as Other. Other now includes the results of National Methanol Company (NMC), previously included in the International Energy segment. Prior periods have been recast to conform to the current segment structure.

Electric Utilities and Infrastructure

On a reported and adjusted basis, Electric Utilities and Infrastructure recognized first quarter 2017 segment income of $635 million, compared to $664 million in the first quarter of 2016, a decrease of $0.03 per share, excluding share dilution of $0.02 cents per share.

Lower quarterly results at Electric Utilities and Infrastructure were primarily driven by warm winter weather compared to the prior year (-$0.14 per share), across all jurisdictions.

This unfavorable driver was partially offset by:

  • Lower O&M expenses (+$0.08 per share), due to reduced storm restoration costs compared to prior year and ongoing cost savings initiatives
  • Higher retail revenues from increased pricing, riders and volumes (+$0.04 per share) driven by new rates in Duke Energy Progress South Carolina, base rate adjustments in Florida, and energy efficiency rider revenues at Duke Energy Carolinas

Gas Utilities and Infrastructure

Gas Utilities and Infrastructure recognized first quarter 2017 reported and adjusted segment income of $133 million, compared to $32 million in the first quarter of 2016, an increase of $0.14 per share.

Higher quarterly results at Gas Utilities and Infrastructure were primarily driven by:

  • Contribution from Piedmont Natural Gas (+$0.14 per share), which was acquired in October 2016, before debt financing costs that are included in Other, and share dilution
  • Higher earnings from mid-stream pipeline investments (+$0.01 per share)

Commercial Renewables

On a reported and adjusted basis, Commercial Renewables recognized first quarter 2017 segment income of $25 million, compared to $26 million in the first quarter of 2016. Higher earnings from new wind projects brought on-line in late 2016 (+$0.01 per share) were offset by lower solar ITCs in the current year (-$0.01 per share).

Other

Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy's captive insurance company, and other investments including NMC, an equity method investment.

On a reported basis, Other recognized first quarter 2017 net expense of $77 million, compared to net expense of $148 million in the first quarter of 2016. In addition to the drivers outlined below, quarterly results were impacted by lower costs to achieve mergers and charges related to cost savings initiatives in the prior year. These charges were treated as special items and therefore excluded from adjusted earnings.

On an adjusted basis, Other recognized first quarter 2017 adjusted net expense of $67 million, compared to adjusted net expense of $62 million in the first quarter of 2016, a decrease of $0.01 per share. Lower quarterly results at Other were driven by higher interest expense at the holding company, primarily resulting from the Piedmont Natural Gas acquisition financing (-$0.02 per share), partially offset by higher earnings from NMC (+$0.01 per share).

Duke Energy's consolidated reported effective tax rate for first quarter 2017 was 32.4 percent, compared to 30.4 percent in the first quarter of 2016. The consolidated adjusted effective tax rate for first quarter 2017 was 32.5 percent, compared to 25.6 percent in 2016. Adjusted effective tax rate is a non-GAAP financial measure. The tables on pages 10 and 11 present a reconciliation of the GAAP reported effective tax rate to the adjusted effective tax rate.

Discontinued Operations

Duke Energy's first quarter 2016 Income from Discontinued Operations includes the operating results of the International Disposal Group of $117 million, which were included in adjusted earnings.

Click here to read the full press release.

For more information:

Organization:
Duke Energy

Address:
526 S Church St
Charlotte, North Carolina
United States, 28202-1904
www.duke-energy.com
Tel: 704-594-6200


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