Q4 2024 Earnings Summary
- Duke Energy expects strong earnings growth, with a 2025 EPS guidance midpoint of $6.30, representing around 7% growth over 2024's adjusted EPS of $5.90. The company anticipates accelerating load growth, reaching 3% to 4% annually from 2027, which positions them to achieve the top half of the 5% to 7% EPS growth range through 2029.
- Significant capital investment plans and a robust economic development pipeline underpin future growth. Duke Energy has increased its 5-year capital plan to $83 billion, a 12% increase over the prior plan, driving an expected 7.7% annual earnings base growth through 2029. The company has an economic development pipeline of over 7 gigawatts in advanced stages, with a focus on data centers and advanced manufacturing, particularly in the Carolinas where they project annual load growth of 4% to 5%.
- Maintaining strong credit metrics and a focus on cost efficiency. Duke Energy is committed to sustaining its credit ratings, targeting an FFO to debt ratio above 14%, providing over 100 basis points of cushion above Moody's downgrade threshold. The company continues to leverage technology and process improvements to control costs, aiming to keep O&M growth at around 1% CAGR, less than the growth in assets and customers, thereby maintaining its position as a cost leader in the industry.
- Increased O&M expenses in 2025: Duke Energy expects higher Operating and Maintenance expenses in 2025 due to deferred projects and preparation for future storm costs, which may pressure earnings.
- Equity dilution concerns: The planned increase in equity funding of $6.5 billion over the next 5 years may dilute existing shareholders and pressure per-share earnings growth.
- Underperformance in certain jurisdictions: Duke Energy's subsidiaries in Ohio and Kentucky continue to under-earn compared to other regions, indicating ongoing regulatory or operational challenges in these areas.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Down ~10% (from $8,154 million in Q3 2024 to $7,360 million in Q4 2024) | Total Revenue declined sharply in Q4 2024 as opposed to Q3 2024. This drop suggests that factors driving higher revenue in Q3 – such as rate adjustments and one‐time weather-related revenue impacts – were not present in Q4, resulting in a significant reduction despite previously stronger performance. |
Operating Income (EBIT) | Nearly flat ($2,144 million in Q3 2024 vs. $2,112 million in Q4 2024) | Operating Income remained almost unchanged as the decline in revenue was largely offset by lower operating costs. Notably, cost management and improvements in expense ratios helped cushion EBIT, reflecting effective control measures in contrast to the previous period’s higher revenue driven by unusual factors. |
Net Income | Declined ~9% (from $1,315 million in Q3 2024 to $1,191 million in Q4 2024) | Net Income fell in line with revenue, as the reduced top-line performance translated into lower bottom-line figures. The contraction reflects both the lower revenue base and the ongoing cost pressures, which had been partly managed in Q3 but became more evident in Q4. |
EPS (Basic and Diluted) | Surged over 250% (from $1.60 in Q3 2024 to $5.71 in Q4 2024) | EPS experienced a dramatic jump despite lower revenue, indicating significant non-operating adjustments. This surge is likely driven by one-time gains, share repurchase effects or a favorable tax/financing mix that substantially improved the per-share metrics relative to the prior quarter’s levels. |
Cost of Goods Sold (COGS) | Dropped significantly (from $2,644 million in Q3 2024 to $2,184 million in Q4 2024) | COGS declined by roughly $460 million, suggesting improved operational efficiency or lower fuel/commodity costs in Q4 2024 relative to Q3 2024. This reduction enhanced margin dynamics even as revenues fell, likely reflecting a reversion from the previous quarter’s higher cost base linked to factors like increased fuel usage during high-demand events. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
2024 Adjusted EPS Guidance | FY 2024 | $5.85 to $6.10 | — | dropped |
FFO to Debt Target | 2025 | 14% | 14% | no change |
EPS Growth Rate | Long-Term | 5% to 7% through 2028 | 5% to 7% through 2029 | raised |
Capital Plan | Multi-Year | Increase indicated | $83 billion 5‑year plan; a 12% increase vs the prior plan | raised |
Tax Credit Monetization | FY 2024 | $300M to $500M | — | dropped |
Effective Tax Rate | FY 2024 | 12% to 14% | — | dropped |
Load Growth Target | FY 2024 | 2% | — | dropped |
Load Growth Forecast | 2028 Outlook | Up to 20,000 GWh (a 2,000 GWh increase) | — | dropped |
2025 EPS Guidance | FY 2025 | — | $6.17 to $6.42 (midpoint $6.30; ~7% growth over 2024 EPS of $5.90) | no prior guidance |
Retail Sales Growth | FY 2025 | — | 1.5% to 2% (for 2025) with load growth accelerating to 3%-4% starting in 2027 | no prior guidance |
Segment-Specific Drivers | FY 2025 | — | Electric and Gas segment drivers mentioned | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Adjusted EPS | FY 2024 | $5.85 to $6.10 | $5.71 | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Consistent EPS growth targets (5%-7%) | Q1–Q3 2024: Reaffirmed 5%-7% EPS growth through 2028, with confidence in reaching the higher end in later years. | Reaffirmed 5%-7% EPS growth through 2029, highlighting potential in the top half of the range for 2027–2029. | Consistent reaffirmation; now extended through 2029. |
Accelerating load growth | Q1–Q3 2024: Cited strong residential/commercial additions; large data center and advanced manufacturing projects fueling 1.5%-2% annual growth, accelerating to higher levels by 2027–2028. | Projecting 3%-4% enterprise-wide load growth by 2027, with 50% of the pipeline as data centers. | Increasing optimism around data centers and advanced manufacturing. |
Significant capital investment plans | Q1–Q3 2024: Maintained a $73B five-year plan; signaled future increases. Q3 mentioned an update coming in early 2025 without a firm new total. | Announced a new $83B five-year plan (up 12% from prior), driving 7.7% annual earnings base growth. | Plan increased from $73B to $83B. |
Economic development pipeline | Q1–Q3 2024: Robust pipeline in data centers, advanced manufacturing; near-term incremental load rising, with 2 GW of data centers signed. | Exceeds 7 GW in near-term pipeline; 50% of projects are data centers by 2029. | Continues to grow, emphasizing data center demand. |
Introduction of SMRs | Q2–Q3 2024: Evaluated SMR technology for future nuclear needs, focusing on cost/risk; planning 600 MW by 2035 in NC. | Joined a consortium with TVA under a DOE grant to explore SMRs, emphasizing supply chain readiness and engineering design. | Ongoing interest and collaboration for future nuclear options. |
Maintaining strong credit metrics | Q1–Q3 2024: Targeted 14% FFO to debt, providing ~100 bps cushion above Moody’s threshold; storm impacts in 2024 but expected to recover. | Reiterated keeping FFO to debt >14%, maintaining significant cushion above downgrade thresholds. | Consistent focus on preserving credit quality. |
Cost efficiency and O&M management | Q3 2024: Addressed higher O&M from hurricane restoration; aiming to reduce spending in Q4. | Targeting a 1% CAGR on O&M growth, leveraging AI and scale to remain a cost leader. | New emphasis on controlled O&M growth. |
Potential equity dilution | Q1–Q3 2024: Issued or planned to issue $500M of equity per year via DRIP/ATM; hinted at higher capital needs in updated plan. | Planning $6.5B in equity over five years (about 40% of the capital plan increase), primarily through DRIP and ATM. | Increased equity requirements to fund growth. |
Underperformance in certain areas | Q1–Q3 2024: No mention of jurisdictional underperformance. | Cited Ohio and Kentucky returns on equity as below average; working on improvements through rate cases. | Newly highlighted underperformance in OH and KY. |
Industrial sector sales rebound | Q1–Q3 2024: Initially expected mid-2024 rebound after plant retooling; shifted to late 2024 or early 2025. | No specific mention in Q4 2024 about the industrial rebound timeline. | Not discussed this quarter. |
Supply chain constraints and risks | Q1–Q3 2024: Managed solar panels/transformers; continuing to watch SMR technology supply chain. | No mention in Q4 2024 about new supply chain constraints. | Focus has diminished; no new updates. |
Regulatory environment and rate cases | Q1–Q3 2024: Achieved constructive outcomes across jurisdictions, approving ~$75–$80B rate base, with multiyear plans in FL/NC/IN. | Noted $45B of rate base investments approved recently; multiyear rate plans in key territories reducing near-term filings. | Continued supportive environment, aiding investment recovery. |
Nuclear production tax credits | Q2–Q3 2024: Anticipated formal guidance end of 2024; planned gradual amortization over 4 years. | No mention in Q4 2024 about nuclear PTC timing or strategy. | Not discussed further. |
Perpetual preferred dividend reset | Q1 2024: September 2024 reset anticipated; evaluating market options. | No new information provided in Q4 2024. | No update after initial Q1 mention. |
New EPA regulations (Q1 mention) | Q1 2024: Studying rule impacts on coal-to-gas conversions, potential litigation. | Not mentioned in Q4 2024. | No additional discussion post-Q1 mention. |
Potential macroeconomic downturn | Q2 2024: Monitoring recession risks but still comfortable within 5%-7% EPS growth. | No mention in Q4 2024 about a macroeconomic downturn impacting demand. | Not discussed in latest call. |
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EPS Growth Guidance
Q: Are you guiding towards the top end of the EPS CAGR range?
A: Brian Savoy confirmed that with accelerating load growth from 2027 to 2029 , they see an opportunity to earn in the top half of the 5% to 7% EPS CAGR range over five years. This is based on a growing economic development pipeline and the ability to serve increasing load demand. -
Load Growth from Data Centers
Q: Any changes in load growth expectations from data centers and hyperscalers?
A: Harry Sideris stated they are confident in their plan and have not seen any pullback from hyperscalers; in fact, they are seeing an acceleration in discussions. Efficiency gains like DeepSeek are expected to increase demand for AI, leading to larger load growth, especially from generative AI data centers later in the plan. -
Credit Metrics Targets
Q: Can you provide a specific target range for credit metrics over the long term?
A: Brian Savoy indicated they finished 2024 at 13.9% FFO to debt despite storm impacts. Looking ahead, they have guided to above 14%, providing over 100 basis points above Moody's downgrade threshold and over 200 basis points above S&P's. They feel this is the right target for now and will provide more specific guidance as the plan progresses. -
Equity Funding Plans
Q: Will the use of hybrid securities change your equity needs?
A: Brian Savoy explained that annual equity funding is around 1% to 1.5% of market cap. They plan to use the ATM and DRIP, but hybrids continue to be attractive, and they will look for the most cost-effective, shareholder-friendly solutions to fund equity needs. -
Cost Savings and Efficiency
Q: How are you addressing cost savings and efficiency improvements?
A: Brian Savoy emphasized they have been a cost leader by leveraging technology, including AI, process improvements, and scale. O&M is expected to increase slightly as the asset base grows, but they aim to keep O&M growth at around 1% CAGR, less than the assets and customers being added. Harry Sideris added they have a strong continuous improvement culture and are using technology and programmatic approaches to save money and improve efficiency. -
Under-Earning Subsidiaries
Q: How will you improve ROE in under-earning regions like Ohio and Kentucky?
A: Harry Sideris noted they continuously work on ways through rate cases and other mechanisms to improve returns. Lynn Good added that ROE can vary year to year due to factors like outages, and it's important to evaluate over a longer term. -
Legislation in South Carolina
Q: Could South Carolina legislation impact your plans?
A: Harry Sideris stated they do not anticipate changes to their plans due to the legislation. The discussions are more about tone-setting around support for the dual state system, regulatory timelines, and an all-of-the-above strategy. -
Potential Upside to Load Growth
Q: Is there potential for further upside to load growth over time?
A: Harry Sideris expressed confidence in their plan and continues to work on bringing additional load. Lynn Good mentioned that their pipeline continues to increase, with 50% of the 2029 pipeline being data centers, and they will keep updating on how growth translates. -
Nuclear Initiatives
Q: How does changing federal administration impact your nuclear strategy?
A: Lynn Good explained their strategy is long-term, built to serve customers for decades. They are a strong nuclear operator, exploring how nuclear can be part of their strategy in the 2030s and beyond. They joined a consortium with TVA and others on a DOE grant to learn more about new technologies. -
2025 Earnings Guidance
Q: Are you being conservative with 2025 earnings guidance?
A: Brian Savoy stated the $6.30 EPS for 2025 is firmly within their 5% to 7% growth range. Increases in O&M are due to timing shifts, catching up on projects delayed by storms, and setting aside resources for additional storm costs.