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    DUK
    Earnings call· Dec 2024(Q4 FY24)

    Duke Energy CORP DUK

    Feb 13, 2025 Source

    Executive summary

    Duke Energy Q4 FY24 — Strong 2024 Performance, Increased Capital Plan, and Accelerated Load Growth Outlook

    Duke Energy concluded 2024 within its adjusted EPS guidance, driven by strong regulatory execution and rate case outcomes. The company unveiled an increased $83 billion capital plan and an accelerated load growth forecast from 2027, particularly in the Carolinas, underpinned by significant economic development and data center projects. Management expressed confidence in achieving the higher end of its 5-7% EPS growth rate in the latter part of the plan, supported by efficient recovery mechanisms and a commitment to a strong balance sheet.

    Highlights

    5

    • Achieved 2024 adjusted EPS of $5.90, finishing within guidance range.

    • Increased 5-year capital plan to $83 billion, a 12% increase, driving 7.7% annual earnings base growth through 2029.

    • Forecasted annual load growth accelerating to 3% to 4% enterprise-wide from 2027, with Carolinas at 4% to 5%.

    • Secured regulatory approvals for $45 billion of rate base investments, minimizing rate case exposure in 2025-2026.

    • Targeting FFO to debt above 14% by end of 2025, providing over 100 bps cushion above Moody's downgrade threshold.

    Concerns

    2

    • 2024 results partially offset by impacts of a historic hurricane season.

    • O&M expected to increase in 2025 due to catch-up on deferred grid projects/generation outages and additional storm costs.

    Guidance & targets

    5
    CategoryTargetConfidence
    Adjusted EPS
    $6.17 to $6.42
    high materiality
    High
    Adjusted EPS Growth Rate
    5% to 7%
    high materiality
    High
    5-year Capital Plan
    $83 billion
    high materiality
    High
    Annual Earnings Base Growth
    7.7%
    high materiality
    High
    FFO to Debt
    above 14%
    high materiality
    High

    Operational metrics

    10
    Adjusted EPS
    $5.90
    FY24

    Finished within guidance range.

    Retail Sales Growth
    1.5% to 2%
    2025

    Assumes normal weather and supported by strong residential customer growth, improving industrial activity, and business expansion.

    Load Growth
    1.5% to 2%
    annual

    Planning for annual load growth between 1.5% to 2% of the enterprise in the near term.

    Load Growth
    3% to 4%
    annual

    Accelerating volumes with annual load growth increasing to 3% to 4% of the enterprise beginning in 2027.

    Load Growth
    4% to 5%
    annual

    Carolinas specifically expected to grow at 4% to 5% over the same period (2027 onwards).

    Capital Plan Increase
    12%versus prior plan
    5-year plan

    The 5-year capital plan is now $83 billion, a 12% increase versus our prior plan.

    Grid Investments
    45%
    5-year plan

    Grid investments represent around 45% of our capital plans.

    Equity Funding
    $6.5 billion
    next 5 years

    Increased equity funding to $6.5 billion over the next 5 years, using ATM and DRIP programs.

    Energy Tax Credits Monetized
    over $500 million
    2024

    Efficiently monetized over $500 million of credits that will benefit customers over time.

    O&M Growth Rate
    around 1%
    CAGR

    Long-term planning assumption for O&M growth, much less than assets and customers being added.

    Industry KPIs

    5
    MetricValueDetails
    Ffo to debt13.9%%
    Retail sales growth1.5% to 2%%
    Regulatory rate base growth$45 billionUSD
    New gas generation builds upgradesover 2 GWGW
    Contracted large load capacity esas loasover 7 GWGW

    Orderbook & backlog

    1
    Large-load / Data Center Pipelineover 7 GWQ4 FY24

    Near-term and advanced stage pipeline. Broader pipeline is at least double this amount. Includes advanced manufacturing and pharmaceuticals. Data centers comprise 50% of the pipeline looking out to 2029. Forecast includes projects with letter agreements or in very late-stage development.

    Capital programs

    1
    5-year Capital Planunderway$83 billion
    Funding: $6.5 billion equity funding (40% of increase) via ATM and DRIP; remaining from debt/operating cash flow
    Start: FY25

    Benefit: 7.7% annual earnings base growth

    12% increase versus prior plan. Majority driven by generation investments reflected in IRPs. Grid investments represent around 45% of the plan.

    Risks & headwinds

    4
    Impacts from historic hurricane season2024

    partially offset top line growth

    Mitigation: Overcame pressure due to accelerating operating cash flow and regulatory outcomes.

    Increased O&M expenses2025

    O&M increasing

    Mitigation: Due to catch-up on deferred grid projects/generation outages from 2024 and setting aside resources for additional storm costs. Long-term O&M CAGR expected around 1%.

    Higher interest expense2025

    driven by higher interest expense

    Mitigation: Partially offset by growth in Electric and Gas segments.

    Modest share dilution2025

    modest share dilution

    Mitigation: To fund growing capital plan, using ATM and DRIP programs.

    What to watch in Q1 FY25

    5

    Load Growth Acceleration

    beginning 2027
    Current1.5% to 2% enterprise-wide
    Target3% to 4% enterprise-wide

    Why it matters

    This acceleration is a key driver for the higher end of the EPS growth rate and underpins the increased capital plan.

    Beginning in 2027, we see an acceleration in volumes with annual load growth increasing to 3% to 4% of the enterprise.

    Q&A highlights

    6

    Asked for more specific guidance on the "higher in the range" EPS CAGR and a more precise FFO to debt target range beyond "above 14%".

    Brian Savoy confirmed the opportunity to earn in the top half of the 5-7% EPS range, especially in the back end (2027-2029) due to accelerating load growth. For FFO to debt, he stated 14% is the right target for now, providing sufficient cushion, and more specific guidance will come as the plan progresses.

    “As we look at our plan and see the load growth accelerating in '27 through '29, clearly, the opportunity is there to earn in the top half of the range. And you're exactly right. That's what we're alluding to.”

    asked by Shar Pourreza · answered by Brian Savoy

    2 min read6 chapters

    Detailed Narrative

    01

    2024 Achievements and Regulatory Execution

    Duke Energy achieved its 2024 adjusted EPS target of $5.90, despite impacts from a historic hurricane season. The company secured approval for $45 billion in rate base investments over the past two years, significantly reducing rate case exposure for 2025 and 2026. Key regulatory advancements included progress on integrated resource plans, CPCN approvals, and the addition of 1,500 MW of solar in Florida.

    02

    Leadership Transition

    Lynn Good announced her retirement, with Harry Sideris assuming the CEO role effective April 1. The transition highlights Sideris's 29-year tenure and diverse experience within the company, with confidence expressed in his leadership to execute the next phase of Duke Energy's strategy. Ted Craver will become independent Chair of the Board.

    03

    Strategic Focus on Growth and Infrastructure

    Duke Energy is executing an "all-of-the-above" generation strategy, including dispatchable natural gas and renewables, to meet growing demand and replace aging infrastructure. Construction has begun on over 2 GW of natural gas generation in the Carolinas, with further CPCN filings planned for the Carolinas and Indiana. Grid investments will continue to be a significant portion of the capital plan, strengthening reliability and resiliency across its 320,000 line miles.

    04

    Accelerating Load Growth and Economic Development

    The company anticipates a significant acceleration in load growth, increasing to 3% to 4% enterprise-wide annually from 2027, driven by economic development projects, particularly in the Carolinas (4% to 5% growth). This includes advanced manufacturing, pharmaceuticals, and a growing pipeline of data centers, with over 7 GW in the near-term advanced stage pipeline.

    05

    Capital Plan and Financial Strength

    The 5-year capital plan has been increased to $83 billion, a 12% rise from the prior plan, primarily for generation investments. This plan is expected to drive 7.7% annual earnings base growth through 2029. The company remains committed to maintaining strong credit ratings, targeting FFO to debt above 14% by the end of 2025, supported by $6.5 billion in equity funding over the next five years.

    06

    Cost Management and Efficiency

    Duke Energy maintains its position as a cost leader, leveraging technology, AI, and process improvements. While O&M is expected to increase slightly due to asset base growth and catch-up📎 on deferred projects, the long-term planning assumption is around a 1% CAGR for O&M growth, significantly less than asset and customer additions. The company emphasizes its continuous improvement culture and scale for supply chain deals.

    AI-generated summary of the company’s earnings call. Not investment advice.