Duke Energy posts higher second quarter 2012 results

— Second quarter 2012 adjusted diluted earnings per share (EPS) were $1.02, compared to 99 cents for the second quarter 2011

— Reported diluted EPS for second quarter 2012 was 99 cents, compared to 98 cents for the second quarter 2011

— Duke Energy remains on track to achieve its 2012 adjusted diluted EPS guidance range of $4.20 to $4.35 per share for the combined company

— Duke Energy financial results for the second quarter 2012 are on a stand-alone basis and do not include Progress Energy’s results

CHARLOTTE, N.C., Aug. 2, 2012 /PRNewswire/ — Duke Energy (NYSE: DUK) today announced second quarter 2012 adjusted diluted EPS of $1.02, compared to 99 cents for second quarter 2011, and reported diluted EPS of 99 cents, compared to 98 cents for the same period last year.

Current year and prior year EPS amounts have been adjusted to reflect the one-for-three reverse stock split which was completed immediately prior to closing the merger with Progress Energy on July 2, 2012.

In connection with the merger, Progress Energy has become a wholly owned direct subsidiary of Duke Energy.

As a result, the Duke Energy financial results for the second quarter 2012 are on a stand-alone basis and do not include Progress Energy’s results. Progress Energy results for the second quarter 2012 are contained in a separate news release. The financial results of Progress Energy will be included in Duke Energy’s consolidated results beginning with third quarter 2012.

Higher second quarter results were driven by revised customer rates in the Carolinas and lower storm restoration costs in U.S. Franchised Electric & Gas. These results were partially offset by less favorable weather, higher financing costs, and increased depreciation expense as a result of higher rate base investment levels. As expected, International Energy’s results were below prior year primarily due to lower earnings in Central America and unfavorable foreign exchange rates.

The company remains on track to achieve its 2012 adjusted earnings guidance range of $4.20 to $4.35 per share for the combined company, as adjusted for the one-for-three reverse stock split.

“Now that the merger has closed, our focus is on integrating these two great companies and continuing to deliver on our commitments to our 7.1 million customers,” said Jim Rogers, chairman, president and CEO. “The benefits of this merger to our customers, employees, communities and investors are compelling and we have a talented team of employees working aggressively to achieve them.”

Mark-to-market impacts of economic hedges in the Commercial Power segment and special items affecting Duke Energy’s adjusted diluted EPS for the quarters include:












 

 

(In millions, except per-share amounts)

 

Pretax Amount

 

Tax Effect

2Q2012

EPS Impact

2Q2011

EPS Impact

Second Quarter 2012

— Costs to Achieve, Progress Merger

$(7)

$(0.02)

 

— Mark-to-market impact of economic hedges

$(6)

$2

$(0.01)

 
 

Second Quarter 2011

— Costs to Achieve, Progress Merger

$(5)

$1

 

$(0.01)

 

Total diluted EPS impact

   

$(0.03)

$(0.01)

Reconciliation of reported to adjusted diluted EPS for the quarters:








 

2Q2012

EPS

2Q2011

EPS

Diluted EPS, as reported

$0.99

$0.98

Adjustments to reported EPS:

   

— Diluted EPS impact of special items and mark-to-market in    Commercial Power

 

$0.03

 

$0.01

Diluted EPS, adjusted

$1.02

$0.99

BUSINESS UNIT RESULTS The discussion below of second-quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 18 through 21 present a reconciliation of reported results to adjusted results.

U.S. Franchised Electric and Gas (USFE&G) USFE&G recognized second-quarter 2012 adjusted segment income of $337 million, compared to $297 million in the second quarter 2011, an increase of $0.09 per share.

USFE&G’s increased results were primarily driven by the implementation of revised customer rates in the Carolinas (+$0.14 per share), lower operation and maintenance costs primarily due to significant prior-year storm restoration costs (+$0.08 per share) and increased pricing and riders, including energy efficiency programs (+$0.03 per share).

These results were partially offset by higher planned depreciation expense (-$0.06 per share), less favorable weather (-$0.05 per share), and higher financing costs (-$0.02 per share).

International Energy International Energy recognized second-quarter 2012 adjusted segment income of $105 million, compared to $127 million in the second quarter 2011, a decrease of $0.05 per share.

International Energy’s quarterly adjusted segment income results decreased primarily due to lower pricing in Central America (-$0.05 per share) and unfavorable average foreign exchange rates (-$0.03 per share). These results were partially offset by favorable pricing in Brazil (+$0.01 per share) as well as higher volumes and pricing in Peru (+$0.01 per share).

Commercial Power Commercial Power recognized second-quarter 2012 adjusted segment income of $32 million, compared to $30 million in the second quarter 2011, reflecting no change in earnings per share contribution.

Favorable impacts for the quarter primarily included the non-bypassable stability charge under the new Electric Security Plan (ESP) in Ohio (+$0.05 per share), recovery of a Lehman Brothers receivable previously written-off (+$0.02 per share), lower operation and maintenance costs (+$0.02 per share) and the prior year impairment of the Vermillion gas-fired plant (+$0.01 per share).

Unfavorable impacts primarily included lower margins from the Midwest coal generation fleet resulting from the new ESP in Ohio (-$0.07 per share) and lower margins and volumes realized by Duke Energy Retail (-$0.03 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 2012 adjusted net expense of $18 million, compared to $15 million in the second quarter 2011, a decrease of $0.01 per share.

ANALYST CONFERENCE CALL An earnings conference call for analysts is scheduled for 11 a.m. ET Thursday, Aug. 2. 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.