Duke Energy(US:DUK)2024-05-07 15:40PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Duke Energy Corporation's unaudited Q1 2024 consolidated financial statements and related notes Duke Energy Corporation Financial Statements Q1 2024 vs Q1 2023 Consolidated Financial Highlights (in millions, except EPS) | Financial Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $7,671 | $7,276 | | Operating Income | $1,963 | $1,674 | | Net Income | $1,151 | $761 | | Net Income Available to Common Stockholders | $1,099 | $765 | | Basic and Diluted EPS | $1.44 | $1.01 | | Net Cash from Operating Activities | $2,474 | $1,483 | Consolidated Balance Sheet Summary (in millions) | Balance Sheet Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $178,670 | $176,893 | | Total Liabilities | $128,032 | $126,706 | | Total Equity | $50,638 | $50,187 | Subsidiary Financial Statements Q1 2024 Net Income by Subsidiary (in millions) | Subsidiary | Q1 2024 Net Income | Q1 2023 Net Income | | :--- | :--- | :--- | | Duke Energy Carolinas, LLC | $430 | $272 | | Progress Energy, Inc. | $435 | $359 | | Duke Energy Progress, LLC | $272 | $169 | | Duke Energy Florida, LLC | $179 | $205 | | Duke Energy Ohio, Inc. | $94 | $100 | | Duke Energy Indiana, LLC | $67 | $106 | | Piedmont Natural Gas Company, Inc. | $246 | $232 | Combined Notes to Condensed Consolidated Financial Statements - The sale of substantially all assets in the Commercial Renewables business segment was completed in 2023. The remaining asset disposals are expected to be finished by mid-2024. This business is now classified as discontinued operations8485 Loss from Discontinued Operations (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating revenues | $(6) | $80 | | (Gain) Loss on disposal | $(10) | $220 | | Loss from discontinued operations | $(3) | $(209) | Segment Income (in millions) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Electric Utilities and Infrastructure (EU&I) | $1,021 | $791 | | Gas Utilities and Infrastructure (GU&I) | $284 | $287 | - Duke Energy Carolinas and Duke Energy Progress are seeking 20-year subsequent license renewals for all their nuclear stations, including the Oconee Nuclear Station, to extend operations from 60 to 80 years103108 - Duke Energy Carolinas received approval for a multi-year rate plan in North Carolina, increasing retail revenue by a combined total of $768 million over three years, starting with a $436 million increase in Year 1111 - Duke Energy Florida filed for new base rates on April 2, 2024, proposing a three-year plan starting in January 2025 with requested revenue increases of approximately $593 million in 2025, $98 million in 2026, and $129 million in 2027132 - Duke Energy Indiana filed for a rate increase of $492 million on April 4, 2024, representing an average bill increase of 16.2% to be implemented in two steps in 2025 and 2026143 - Duke Energy Carolinas has asbestos-related reserves of $417 million as of March 31, 2024, with third-party insurance receivables of $572 million to cover certain losses157158 - In Q1 2024, Duke Energy and its subsidiaries issued a total of $3.475 billion in significant debt, including unsecured debt and first mortgage bonds169 - As of March 31, 2024, Duke Energy had $5.122 billion in available capacity under its $9 billion Master Credit Facility174176 - The Inflation Reduction Act (IRA) created a nuclear power Production Tax Credit (PTC) starting January 1, 2024. In Q1 2024, Duke Energy Carolinas and Duke Energy Progress recorded PTC deferred tax assets of approximately $107 million and $14 million, respectively, which will be passed back to customers350 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial performance, clean energy transition, regulatory activities, and future impacts Executive Overview and Matters Impacting Future Results - The company is advancing its clean energy transition by filing for Certificates of Public Convenience and Necessity (CPCNs) for new hydrogen-capable combustion turbines at the Marshall and Roxboro plant sites to support coal retirements114121359 - Significant regulatory activity is underway, with new base rate cases filed in April 2024 for Duke Energy Florida, Duke Energy Indiana, and Piedmont to recover capital investments and support grid modernization358359 - Future results may be impacted by new EPA rules issued in April 2024 regulating GHG emissions and coal ash, which could materially affect operations, costs, and the company's clean energy transition timeline363440 - The company anticipates recovering approximately $1.9 billion of deferred fuel costs in 2024, expecting to return to historical average balances by year-end after significant under-collection in 2022362 Results of Operations Duke Energy EPS Reconciliation (GAAP vs. Adjusted) | (per share) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Reported EPS | $1.44 | $1.01 | | Discontinued Operations | $0.00 | $0.19 | | Adjusted EPS | $1.44 | $1.20 | - Adjusted EPS increased to $1.44 from $1.20 YoY, primarily driven by favorable rate case impacts, improved weather, and growth from riders, which was partially offset by higher interest expense371 - The Electric Utilities and Infrastructure (EU&I) segment income rose to $1,021 million from $791 million YoY, driven by higher revenues from rate cases, favorable weather, and increased retail sales volumes376378 - The Gas Utilities and Infrastructure (GU&I) segment income was nearly flat at $284 million compared to $287 million YoY, as margin growth was offset by higher interest expense and O&M costs382383 Liquidity and Capital Resources Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating Activities | $2,474 | $1,483 | | Investing Activities | $(3,342) | $(3,209) | | Financing Activities | $1,029 | $1,747 | - The significant increase in operating cash flow was primarily driven by a $523 million decrease in net cash outflows from working capital, largely due to the recovery of deferred fuel costs431434 - As of March 31, 2024, Duke Energy had sufficient liquidity with $459 million in cash and $5.1 billion available under its $9 billion Master Credit Facility424 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the company's 2023 Annual Report on Form 10-K for a detailed discussion of market risks - The report directs readers to Item 7 of the 2023 Form 10-K for an in-depth discussion of the company's market risks442 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material internal control changes - The CEO and CFO have concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance of compliance as of March 31, 2024445 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls over financial reporting446 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Notes 4 and 5 of the financial statements and the 2023 Form 10-K for legal proceedings - For details on legal, regulatory, and environmental matters, the report refers to Notes 4 and 5 of the Condensed Consolidated Financial Statements and the 2023 Form 10-K447 Item 1A. Risk Factors This section updates 2023 10-K risk factors, highlighting clean energy strategy, new EPA rules, and CCR management - The company's ability to achieve its net-zero carbon emissions goal by 2050 is subject to significant risks, including regulatory approvals, development of new technologies like carbon capture, and the successful relicensing of its nuclear fleet449450451 - New EPA rules issued in April 2024 impose stringent GHG emission standards and expand coal ash regulations, which may increase compliance costs, impact generation resource mix, and affect the timeline for carbon-reduction targets455456459 - Managing large volumes of Coal Combustion Residuals (CCR) presents operational and financial risks, with potential for increased costs as closure and remediation work progresses under evolving federal and state regulations457458460 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None reported for the period461 Item 5. Other Information No Rule 10b5-1 trading arrangement modifications were made by directors or officers in Q1 2024 - No Rule 10b5-1 trading arrangement modifications were made by directors or officers in Q1 2024462 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including indentures, credit agreements, and certifications