DUKE ENERGY CORPORATION Duke Energy Corporation
Non-GAAP Reconciliations
Third Quarter Earnings Review & Business Update
November 4, 2021
Adjusted Earnings per Share (EPS)
The materials for Duke Energy Corporation's (Duke Energy) Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of adjusted EPS for the quarter and year-to-date periods ended September 30, 2021 and 2020.
The non-GAAP financial measure, adjusted EPS, represents basic EPS available to Duke Energy Corporation common stockholders (GAAP reported EPS), adjusted for the per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance.
Management believes the presentation of adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy's performance across periods. Management uses this non-GAAP financial measure for planning and forecasting and for reporting financial results to the Duke Energy Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measure for adjusted EPS is reported basic EPS available to Duke Energy Corporation common stockholders. Reconciliations of adjusted EPS for the quarter and year-to-date periods ended September 30, 2021 and 2020, to the most directly comparable GAAP measure are included herein.
Special items included in the periods presented include the following items, which management believes do not reflect ongoing costs:
- Workplace and workforce realignment represents costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment.
- Regulatory Settlements represents an impairment charge related to the 2018 South Carolina rate cases, charges related to the CCR settlement and insurance proceeds distributed in accordance with that agreement and Duke Energy Carolinas and Duke Energy Progress partial settlements in the 2019 North Carolina rate cases.
- Gas Pipeline Investments represents costs related to the cancellation of the ACP pipeline and additional exit obligations.
- Severance represents the reversal of 2018 severance charges, which were deferred as a result of a partial settlement in the Duke Energy Carolinas and the Duke Energy Progress 2019 North Carolina rate cases.
Adjusted EPS Guidance
The materials for Duke Energy's Third Quarter Earnings Review and Business Update on November 4, 2021, include a reference to the forecasted 2021 adjusted EPS guidance range of $5.15 to $5.30 per share, narrowed from $5.00 to $5.30 per share during the third quarter of 2021. In addition, the materials reference the 2021 adjusted EPS midpoint of approximately $5.15 based on the original forecasted 2021 adjusted EPS guidance range. The materials also reference the long-term range of annual growth of 5% - 7% through 2025 off the midpoint of original 2021 adjusted EPS guidance range of $5.15. Forecasted adjusted EPS is a non-GAAP financial measure as it represents basic EPS available to Duke Energy Corporation common stockholders (GAAP reported EPS), adjusted for the per share impact of special items (as discussed above under Adjusted EPS).
Due to the forward-looking nature of this non-GAAP financial measure for future periods, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project all special items for future periods, such as legal settlements, the impact of regulatory orders or asset impairments.
Adjusted Segment Income (Loss) and Adjusted Other Net Loss
The materials for Duke Energy's Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of adjusted segment income (loss) and adjusted other net loss for the quarter and year-to- date periods ended September 30, 2021 and a discussion of 2021 forecasted adjusted segment income and forecasted adjusted other net loss.
Adjusted segment income (loss) and adjusted other net loss are non-GAAP financial measures, as they represent reported segment income (loss) and other net loss adjusted for special items (as discussed above under Adjusted EPS). Management believes the presentation of adjusted segment income (loss) and adjusted other net expense provides useful information to investors, as it provides an additional relevant comparison of a segment's or Other's performance across periods. When a per share impact is provided for a segment income (loss) driver, the after-tax driver is derived using the pretax amount of the item less income taxes based on the segment statutory tax rate of 24% for Electric Utilities and Infrastructure, 23% for Gas Utilities and Infrastructure and Other, or an effective tax rate for Commercial Renewables. The after-tax earnings drivers are divided by the Duke Energy weighted average shares outstanding for the period. The most directly comparable GAAP measures for adjusted segment income (loss) and adjusted other net loss are reported segment income (loss) and other net loss, which represents segment income (loss) and other net loss from continuing operations, including any special items. Reconciliations of adjusted segment income (loss) and adjusted other net loss for the quarter and year-to-date periods ended September 30, 2021, to the most directly comparable GAAP measures are included herein. Due to the forward-looking nature of any forecasted adjusted segment income (loss) and forecasted other net loss and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures are not available at this time, as the company is unable to forecast all special items, as discussed above under Adjusted EPS guidance.
Effective Tax Rate Including Impacts of Noncontrolling Interests and Preferred Dividends and Excluding Special Items
The materials for Duke Energy's Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of the effective tax rate including impacts of noncontrolling interests and preferred dividends and excluding special items for the year-to-date period ended September 30, 2021. The materials also include a discussion of the 2021 forecasted effective tax rate including impacts of noncontrolling interests and preferred dividends and excluding special items. Effective tax rate including impacts of noncontrolling interests and preferred dividends and excluding special items is a non-GAAP financial measure as the rate is calculated using pretax income and income tax expense, both adjusted for the impact of special items, noncontrolling interests and preferred dividends. The most directly comparable GAAP measure is reported effective tax rate, which includes the impact of special items and excludes the impacts of noncontrolling interests and preferred dividends. A reconciliation of this non-GAAP financial measure for the year-to-date period ended September 30, 2021, to the most directly comparable GAAP measure is included herein. Due to the forward-looking nature of the forecasted effective tax rates including impacts of noncontrolling interests and preferred dividends and excluding special items, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project all special items, as discussed above under Adjusted EPS Guidance.
Net Regulated Electric and Gas O&M
The materials for Duke Energy's Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of Duke Energy's net regulated Electric and Gas operating, maintenance and other expenses (O&M) for the year-to-date period ended December 31, 2016, as well as the forecasted year-to-date period ended December 31, 2021.
Net regulated Electric and Gas O&M is a non-GAAP financial measure, as it represents reported O&M expenses adjusted for special items and expenses recovered through riders and excludes O&M expenses for Duke Energy's non-margin based Commercial businesses and non-regulated electric products and services supporting regulated operations.
Management believes the presentation of net regulated Electric and Gas O&M provides useful information to investors, as it provides a meaningful comparison of financial performance across periods. The most directly comparable GAAP financial measure for net regulated Electric and Gas O&M is reported operating, maintenance and other expenses. Reconciliations of net regulated Electric and Gas O&M for the year-to-date period ended December 31, 2016, as well as the forecasted year-to-date period ended December 31, 2021, to the most directly comparable GAAP measure are included here-in.
Available Liquidity
The materials for Duke Energy's Third Quarter Earnings Review and Business Update on November 4, 2021, include a discussion of Duke Energy's available liquidity balance. The available liquidity balance presented is a non-GAAP financial measure as it represents cash and cash equivalents, excluding certain amounts held in foreign jurisdictions and cash otherwise unavailable for operations, the remaining availability under Duke Energy's available credit facilities, including the master credit facility as of September 30, 2021. The most directly comparable GAAP financial measure for available liquidity is cash and cash equivalents. A reconciliation of available liquidity as of September 30, 2021, to the most directly comparable GAAP measure is included herein.
DUKE ENERGY CORPORATION
REPORTED TO ADJUSTED EARNINGS RECONCILIATION
Three Months Ended September 30, 2021 (Dollars in millions, except per share amounts)
Special Items | |||||||||||||||||
Workplace | |||||||||||||||||
Reported | Gas Pipeline | and | Regulatory | Total | Adjusted | ||||||||||||
Workforce | |||||||||||||||||
Earnings | Investments | Realignment | Settlements | Adjustments | Earnings | ||||||||||||
SEGMENT INCOME (LOSS) | |||||||||||||||||
Electric Utilities and Infrastructure | $ | 1,425 | $ | - | $ | - | $ | 64 | C $ | 64 | $ | 1,489 | |||||
Gas Utilities and Infrastructure | (3) | (2) A | - | - | (2) | (5) | |||||||||||
Commercial Renewables | 78 | - | - | - | - | 78 | |||||||||||
Total Reportable Segment Income | 1,500 | (2) | - | 64 | 62 | 1,562 | |||||||||||
Other | (134) | - | 7 | B | - | 7 | (127) | ||||||||||
Net Income Available to Duke Energy Corporation Common Stockholders | $ | 1,366 | $ | (2) | $ | 7 | $ | 64 | $ | 69 | $ | 1,435 | |||||
EPS AVAILABLE TO DUKE ENERGY CORPORATION COMMON STOCKHOLDERS | $ | 1.79 | $ | - | $ | - | $ | 0.09 | $ | 0.09 | $ | 1.88 |
Note: Earnings Per Share amounts are adjusted for accumulated dividends for Series B Preferred Stock of $0.02.
A - Net of $1 million tax expense. $3 million recorded within Equity in earnings (losses) of unconsolidated affiliates related to exit obligations for ACP on the Condensed Consolidated Statements of Operations.
B - Net of $2 million tax benefit. $8 million recorded within Impairment of assets and other charges and $1 million within Operations, maintenance and other related to costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment on the Condensed Consolidated Statements of Operations.
C - Net of $18 million tax benefit at Duke Energy Carolinas and $1 million tax benefit at Duke Energy Progress.
- $160 million of expense recorded within Impairment of assets and other charges, $77 million of income recorded within Other income and expenses, $5 million of expense within Operations, maintenance and other, $13 million of income within Regulated electric operating revenues and $3 million of expense within Interest expense on the Duke Energy Carolinas' Condensed Consolidated Statement of Operations related to a South Carolina rate case impairment charge and the CCR Settlement and insurance proceeds distributed in accordance with that agreement.
- $42 million of expense recorded within Impairment of assets and other charges, $34 million of income recorded within Other income and expenses, $7 million of expense within Operations, maintenance and other, $15 million of income within Regulated electric operating revenues and $5 million of expense within Interest expense on the Duke Energy Progress' Condensed Consolidated Statement of Operations related to a South Carolina rate case impairment charge and the CCR Settlement and insurance proceeds distributed in accordance with that agreement.
Weighted Average Shares (reported and adjusted) - 769 million
DUKE ENERGY CORPORATION
REPORTED TO ADJUSTED EARNINGS RECONCILIATION
Nine Months Ended September 30, 2021
(Dollars in millions, except per share amounts)
Special Items | |||||||||||||||||
Workplace | |||||||||||||||||
Reported | Gas Pipeline | and | Regulatory | Total | Adjusted | ||||||||||||
Workforce | |||||||||||||||||
Earnings | Investments | Realignment | Settlements | Adjustments | Earnings | ||||||||||||
SEGMENT INCOME | |||||||||||||||||
Electric Utilities and Infrastructure | $ | 3,180 | $ | - | $ | - | $ | 64 | C $ | 64 | $ | 3,244 | |||||
Gas Utilities and Infrastructure | 259 | 15 | A | - | - | 15 | 274 | ||||||||||
Commercial Renewables | 152 | - | - | - | - | 152 | |||||||||||
Total Reportable Segment Income | 3,591 | 15 | - | 64 | 79 | 3,670 | |||||||||||
Other | (521) | - | 142 | B | 142 | (379) | |||||||||||
Net Income Available to Duke Energy Corporation Common Stockholders | $ | 3,070 | $ | 15 | $ | 142 | $ | 64 | $ | 221 | $ | 3,291 | |||||
EPS AVAILABLE TO DUKE ENERGY CORPORATION COMMON STOCKHOLDERS | $ | 4.00 | $ | 0.02 | $ | 0.19 | $ | 0.09 | $ | 0.30 | $ | 4.30 |
Note: Earnings Per Share amounts are adjusted for accumulated dividends for Series B Preferred Stock of $0.02.
A - Net of $4 million tax benefit. $19 million recorded within Equity in earnings (losses) of unconsolidated affiliates related to exit obligations for ACP on the Condensed Consolidated Statements of Operations.
B - Net of $42 million tax benefit. $139 million recorded within Impairment of assets and other charges, $28 million within Operations, maintenance and other, and $17 million within Depreciation and amortization related to costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment on the Condensed Consolidated Statements of Operations.
C - Net of $18 million tax benefit at Duke Energy Carolinas and $1 million tax benefit at Duke Energy Progress.
- $160 million of expense recorded within Impairment of assets and other charges, $77 million of income within Other income and expenses, $5 million of expense within Operations, maintenance and other, $13 million of income within Regulated electric operating revenues and $3 million of expense within Interest expense on the Duke Energy Carolinas' Condensed Consolidated Statement of Operations related to a South Carolina rate case impairment charge and the CCR Settlement and insurance proceeds distributed in accordance with that agreement.
- $42 million of expense recorded within Impairment of assets and other charges, $34 million of income within Other income and expenses, $7 million of expense within Operations, maintenance and other, $15 million of income within Regulated electric operating revenues and $5 million of expense within Interest expense on the Duke Energy Progress' Condensed Consolidated Statement of Operations related to a South Carolina rate case impairment charge and the CCR Settlement and insurance proceeds distributed in accordance with that agreement.
Weighted Average Shares (reported and adjusted) - 769 million
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Duke Energy Corporation published this content on 04 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 10:53:05 UTC.
