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Duke Energy posts strong second quarter 2014 results; increases outlook for 2014



Aug 7, 2014

Duke Energy announced second quarter 2014 adjusted diluted EPS of $1.11, compared to 87 cents for second quarter 2013, and reported diluted EPS of 86 cents, compared to 48 cents for the same period last year.

The company saw strong performance from all of its business units in the quarter, led by Regulated Utilities, which continued to benefit from favorable weather and a lower effective tax rate, and International Energy, which recognized a tax benefit resulting from the reorganization of the company's operations in Chile.

Based upon results through the first half of the year, the company is increasing its 2014 adjusted earnings guidance range from $4.45 to $4.60 per share to $4.50 to $4.65 per share.

"Our strong second quarter performance and continued focus on operational excellence leaves us well-positioned to meet our financial objectives in 2014 and beyond. We are committed to maintaining affordable customer rates and to supporting the strength of our local communities, as evidenced by our recent agreement with the North Carolina Eastern Municipal Power Agency," said Lynn Good, president and CEO.

"We are executing our strategy to position the business for long-term sustainable growth, benefitting our customers and shareholders," she added.

Business Unit Results

In addition to the summary business unit discussion below, a comprehensive table of quarterly and year-to-date earnings per share drivers compared to the prior year are provided on pages 10 and 11.

The discussion below of second-quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 24 through 27 present a reconciliation of reported results to adjusted results.

Regulated Utilities

Regulated Utilities recognized second quarter 2014 adjusted segment income of $689 million, compared to $590 million in the second quarter 2013, an increase of $0.13 per share.

Increased quarterly results at Regulated Utilities were primarily driven by:

  • Higher revenues from increased pricing and riders (+$0.07 per share) primarily related to the implementation of revised customer rates
  • Favorable weather (+$0.07 per share) driven by warmer than normal temperatures across Duke Energy's service territories
  • Lower effective tax rate (+$0.05 per share) primarily due to a state tax settlement that resulted in a favorable adjustment to deferred taxes
  • Lower operating and maintenance expenses (+$0.03 per share) primarily driven by a prior-year donation associated with the 2013 Duke Energy Progress rate case settlement as well as the benefit of nuclear outage cost levelization
  • Increased wholesale net margins (+$0.02 per share) primarily resulting from growth in contracted amounts

These favorable drivers were partially offset by:

  • Higher depreciation and amortization expense (-$0.07 per share) primarily resulting from additional plant in service and a decrease in cost of removal amortization
  • Higher interest expense (-$0.03 per share) primarily due to lower post-in-service debt returns on projects now reflected in customer rates
  • Lower AFUDC equity (-$0.01 per share) primarily due to the completion of certain major capital projects

On a year-to-date basis, Regulated Utilities recognized adjusted segment income of $1,426 million, compared to $1,246 million in the comparable year-to-date period of 2013, an increase of $0.26 per share.

Increased year-to-date results at Regulated Utilities were primarily driven by:

  • Higher revenues from increased pricing and riders (+$0.20 per share) primarily related to the implementation of revised customer rates
  • Favorable weather (+$0.15 per share) across Duke Energy's service territories
  • Higher weather-normal retail volumes (+$0.06 per share) of 1.5 percent compared to 2013 primarily driven by strong results in the first quarter
  • Lower effective tax rate (+$0.05 per share) primarily due to a state tax settlement that resulted in a favorable adjustment to deferred taxes
  • Increased wholesale net margins (+$0.05 per share) primarily resulting from growth in contracted amounts and favorable weather

These favorable drivers were partially offset by:

  • Higher depreciation and amortization expense (-$0.14 per share) due to additional plant in service and the prior-year impact of cost of removal amortization primarily in Florida
  • Higher interest expense (-$0.06 per share) due to lower post-in-service debt returns on projects now reflected in customer rates
  • Lower AFUDC equity (-$0.03 per share) primarily due to the completion of certain major capital projects

International Energy

International Energy recognized second quarter 2014 adjusted segment income of $146 million, compared to $87 million in the second quarter 2013, an increase of $0.09 per share.

International Energy's improved quarterly earnings were driven by:

  • Favorable results in Latin America (+$0.08 per share) primarily due to a tax benefit resulting from the reorganization of the company's operations in Chile
  • Higher results at National Methanol Company (+$0.02 per share) due to a prior-year extended planned maintenance outage

These favorable drivers were partially offset by unfavorable foreign currency exchange rates (-$0.01 per share).

On a year-to-date basis, International Energy recognized adjusted segment income of $276 million, compared to $184 million in the comparable year-to-date period of 2013, an increase of $0.13 per share.

International Energy's improved year-to-date earnings were driven by:

  • Stronger results in Latin America (+$0.13 per share), primarily due to a tax benefit resulting from the reorganization of the company's operations in Chile and higher average volumes and pricing in Brazil
  • Higher results at National Methanol Company (+$0.02 per share) due to a prior-year extended planned maintenance outage

These drivers were partially offset by unfavorable foreign currency exchange rates (-$0.03 per share).

Commercial Power

Commercial Power recognized second quarter 2014 adjusted segment income of $16 million, compared to a segment loss of $3 million in the second quarter 2013, an increase of $0.02 per share.

Commercial Power's improved quarterly earnings were primarily driven by:

  •  Higher results from the Midwest coal and gas generation fleets (+$0.02 per share) primarily due to higher PJM capacity prices
  • Increased results at the renewables business (+$0.01 per share) due to higher production of the wind and solar portfolio

On a year-to-date basis, Commercial Power recognized adjusted segment income of $26 million, compared to $3 million in the comparable year-to-date period of 2013, an increase of $0.03 per share.

Commercial Power's improved year-to-date earnings were primarily driven by:

  • Increased results from the renewables business (+$0.03 per share) due to higher production of the wind and solar portfolio and lower operating costs
  • Higher results from the Midwest coal and gas generation fleets (+$0.03 per share) primarily due to higher PJM capacity prices

These results were partially offset by lower earnings from the company's competitive retail business, Duke Energy Retail (-$0.02 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 income tax levelization adjustments.

Other recognized a second quarter 2014 adjusted net expense of $65 million, compared to $57 million in the second quarter 2013. On a year-to-date basis, Other recognized adjusted net expense of $113 million, compared to $100 million in the comparable period of 2013.

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


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