Duke Energy Corp.
) reported adjusted fourth quarter 2013 earnings of $1.00 per
share that came in ahead of the Zacks Consensus Estimate of 94
cents by 6.4%. Quarterly earnings were also above the year-ago
figure by 30 cents.
The strong numbers mainly reflect lower costs through
synergies from the 2012 merger with Progress Energy, along with
recovered infrastructure modernization costs through revised
customer rates. The company also benefited from the adoption of
nuclear outage cost levelization in the Carolinas.
Including special items, quarterly earnings increased 56.5% to 97
cents per share on a year-over-year basis.
Full-year 2013 adjusted earnings increased 0.7% year over year to
$4.35 per share, beating the Zacks Consensus Estimate by 4 cents.
Full Year 2013 Operational Update
In 2013, Duke Energy's top line increased 25.3% year over year to
$24,598.0 million. The reported figure fell short of the Zacks
Consensus Estimate of $24,973 million.
On the cost front, total operating expenses were $19,600.0
million in 2013, up 18.7% from $16,514.0 million in 2012.
The company registered a considerable improvement in its
operating income, which escalated 59.4% year over year to
Quarterly Segmental Highlights
Regulated Utilities (formerly known as U.S. Franchised
Electric and Gas):
Segment adjusted income was $607.0 million, up from $498.0
million a year ago. This was driven by lower operating and
maintenance expenses, higher pricing and riders, favorable
weather and increased wholesale net margins.
Segment income advanced to $108.0 million from $89.0 million
buoyed by robust results in Latin America from higher volumes and
pricing in Brazil.
The segment incurred an operating loss of $3 million in the
quarter as against break-even results in the year-ago period. The
weak results reflect lower margins at Duke Energy Retail.
The segment includes corporate interest expense not allocated to
the business units, results from Duke Energy's captive insurance
company, other investments, and income tax levelization
Net expenses were $6.0 million, down from $91.0 million in the
year-ago quarter. The improvement was mainly due to a lower
effective tax rate, favorable captive insurance loss experience,
and higher investment returns.
As of Dec 31, 2013, the company held cash & cash equivalents
of $1,501.0 million versus $1,424.0 million as of Dec 31, 2012.
Long-term debt increased to $40,256.0 million (including current
maturities) from $39,461.0 million as of Dec 31, 2012. The
debt-to-capitalization ratio stood at 49.3% in the quarter.
Duke Energy provided full year 2014 adjusted earnings guidance in
the range of $4.45 to $4.60 per share. It also updated its
longer-term average annual growth to 4% to 6% through 2016. The
Zacks Consensus Estimate for 2014 is pegged at $4.57, on the
higher end of the guided range.
At the Peers
American Electric Power Company Inc.
) reported fourth quarter 2013 operating earnings of 60 cents per
share, beating the Zacks Consensus Estimate of 56 cents by 7.1%.
The quarterly figure also improved 20% from the year-ago profit
of 50 cents.
CMS Energy Corp.
) posted fourth-quarter 2013 earnings per share of 37 cents on
both adjusted and GAAP basis. The quarterly figure was on par
with the Zacks Consensus Estimate, but increased 48% on a
) adjusted operating earnings per share of 42 cents in the fourth
quarter of 2013 were ahead of the Zacks Consensus Estimate of 40
cents, backed by higher rate base earnings. However, the reported
figure came in below the year-ago number of 59 cents by 28.8% due
to lower regulated return on equity and debt compared to last
year and a higher number of shares outstanding.
The largest power provider in the U.S. - Duke Energy - reported
higher quarterly earnings, aided by lower costs and regulatory
approvals of rate base requests. We believe the company's stable
electricity and gas operations will enable it to generate a
relatively steady and growing earnings stream in the future.
Its acquisition of fellow North Carolina based utility, Progress
Energy Inc. spread the new entity's stable U.S. electricity and
gas operations over 7.1 million electric customers in Carolinas,
Florida, Indiana, Kentucky and Ohio.
Recently, Duke Energy announced its plan to divest its stake in
13 power plants in the nation's Midwest after Ohio regulators
denied its request to raise rates. The plants together have a
capacity of 6,600 megawatts.
The company will record a pretax charge of $1 billion to $2
billion in the first quarter of 2014 from the sale, which it
expects will take 12 to 18 months to complete. The company's
willingness to get out of the wholesale power-generation business
in the Midwest reflects the volatility associated with its
AMER ELEC PWR (AEP): Free Stock Analysis
CMS ENERGY (CMS): Free Stock Analysis Report
DUKE ENERGY CP (DUK): Free Stock Analysis
PG&E CORP (PCG): Free Stock Analysis
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Going forward, key growth drivers for the company include its
strong balance sheet, ongoing capital expansion projects and an
above industry average dividend yield. However, the
unfavorable macro backdrop, predominantly fossil-fuel based
generation assets and tepid demand for electricity remain matters
of concern. Duke Energy presently retains a short-term Zacks Rank