Duke Energy Corporation (Holding Company)

Please stand by, we're about to begin. Good day and welcome to the Duke Energy fourth quarter earnings call. Today's conference is being recorded, and at this time I'm going to turn the conference over to Brian Buckler, Vice President of Investor Relations. Please go ahead, sir.

Great. Thank you, Derek. Good morning, everyone, and welcome to Duke Energy's fourth quarter 2019 earnings review and business update. Leading our call today is Lenny Good, Chairman, President, and Chief Executive Officer of along with Steve Young, Executive Vice President and CFO. Today's discussion will include the use of non-GAAP financial measures and forward-looking information. Slide 2 presents our Safe Harbor Statement. A reconciliation of non-GAAP financial measures can be found in today's materials and on DukeEnergy.com. Please note the appendix for today's presentation includes supplemental information and additional disclosures. With that, let me turn the call over to Lynn.

Ryan, thank you, and good morning, everyone. Today we announced 2019 adjusted earnings per share of $5.06, representing 7% growth over last year and solidly within the 4% to 6% earnings guidance range from the 2017 base year. 2019 also marked our 93rd consecutive year paying a quarterly dividend to our shareholders. We recognize that consistent growth in earnings and dividends are important to our investors, and we are delivering. I'm very proud of our employees' commitment and hard work throughout the year. We achieved these financial results while maintaining our focus on the customer. Our reliability statistics improved by 15%, and our internal customer satisfaction metrics improved 25%, a clear indication that we are enhancing the customer experience. The foundation of outstanding service territories and ample low-risk investment opportunities to benefit our customers gives us great confidence. and the strength of our business into 2020 and beyond. We have introduced a guidance range of $5.05 to $5.45, with a midpoint of 5.25, reflecting solid 5% growth into 2020. We have also extended our EPS growth target of 4% to 6% through 2024, built on an expanded capital program. Slide 4 outlines the drivers and opportunities for expanding infrastructure in our jurisdictions. Our service territories are thriving. The Carolinas and Florida lead the East Coast in population growth, driving strong economies and energy infrastructure needs. GDP growth projections for those areas, as well as national Tennessee, also exceeds the national average. To meet the needs of our customers in these regions, we have a $56 billion capital plan over the next five years, 90% of which will be deployed in our regulated electric and gas LDC businesses and drive earnings-based growth from transparent, low-risk investments. Compared to our previous plan, the new plan represents a 12% increase and a projected $6 billion increase in our earnings base by 2024. These capital investments represent an excellent foundation to extend our 46% growth rate through 2024. Steve will provide more details on the five-year capital plan and amendments. We are proud of the work we do to power the lives of our customers. We support the health and prosperity of the communities we serve, not only through investments in our infrastructure, but also through our work in economic development, community leadership, and foundation giving. We also recognize the importance of maintaining competitive electric and gas rates and are pleased that our rates are well below the national average, driven by top quartile O&M performance and a diverse generation mix. The strong and growing jurisdictions we serve at Duke Energy set us apart. and we will continue investing in our grid and cleaner generation, bringing our customers the affordable and reliable service they expect from us. Moving to slide five, our focus remains unchanged and is grounded in our vision to lead the way to cleaner, smarter energy solutions that our customers value. We place our customers at the center of everything we do, and our vision guides our actions and our investments. We believe a customer-focused strategy will also deliver superior returns to our investors over time. The strategy is rightfully underpinned by two foundational elements. First, excellence in operations, which we demand of ourselves and our communities require. And secondly, excellence in stakeholder engagement. 2019 marked another year of strong results in our operations and important progress in stakeholder engagement. I wanted to share a few examples of our important work with stakeholders in 2019. We reached an important settlement with the North Carolina Department of Environmental Quality and key community groups on closure plans for our remaining coal ash sites in the state. This milestone agreement clarifies the methodology and timeframe to address all ash in the basin and enables us to move forward as we transition to cleaner generation. We believe it is a reasonable and constructive approach that protects communities and the environment while saving our customers over a billion dollars in costs. In addition, in North Carolina, we successfully advocated for storm securitization legislation, which became law in November, and reached constructive outcomes in our Piedmont rate cases in both North and South Carolina. We also announced our comprehensive plan to reduce carbon emissions, targeting at least a 50% reduction by 2030 and net zero emissions by 2050. Our updated goals are supported by our announced plans to extend the operating licenses for all of our nuclear units. These units, which will be vital to meeting our carbon goals, achieved a capacity factor above 90% for the 21st consecutive year. We understand the importance of accelerating the path to zero carbon and look forward to working with stakeholders in each of our states to turn these goals into reality. As we turn to slide six, delivering superior returns to our investors drives us and is the commitment of our team at Duke Energy. Increasingly, our investors are also looking at our results on environment, social responsibility, and governance matters. We are very proud of our track record here and consistent with our vision are committed to lead. From establishing industry-leading carbon reduction goals to announcing more than 1500 megawatts of new wind and solar projects in 2019, we are making significant progress. Last year alone, we further reduced carbon emissions an additional 8% from 2005 levels, bringing our total decrease to 39%. Additionally, our broad array of energy efficiency programs in the Carolinas have created significant savings for our customers, well ahead of national averages for these types of programs, while further reducing our carbon footprint. Peak Energy is also committed to social responsibility, sound governance, and transparent disclosures. We issued our first climate report analyzing the two-degree scenario in 2018 and plan to issue an updated report this year. Our ESG ratings reflect our work over more than a decade on sustainability initiatives, and our ratings continue to increase. Many of our investors have an interest in ESG topics, and we understand the importance of achieving excellence in these areas as we move into the next decade. We will be hosting an ESG Investor Day in May, and I'm excited to update all of you on the impressive work we're doing at Duke Energy. Let me close on slide seven, looking beyond our five-year plan to the strength of our business and our future investment opportunities. We see great potential in the three investment priorities we've shared with you over the last few years, modernizing the energy grid, generating cleaner energy, and expanding natural gas infrastructure. Duke Energy's P&D grid across a regulated footprint represents the largest system in the nation, with more than 300,000 line miles of infrastructure. In support of our long-term strategy, we will continue to advance modernization and improvement projects to enable renewables, protect against storms and security threats, and serve the rapidly growing populations in our service areas. The transition to cleaner generation also provides a multi-decade investment opportunity. Our 2030 commitment to reduce carbon emissions by at least 50% includes operating our existing carbon-free resources, retiring certain less efficient plants and investing in renewables and natural gas infrastructure. As an example, the appetite for utility-scale solar in Florida continues to rise, and we expect to bring more than 1,750 megawatts online through 2030. In the Carolinas and the Midwest, significant investments will be needed as we transition these fleets away from coal-fired generation. Our LDC business will also continue to produce opportunities for investment in natural gas infrastructure. We see tremendous value creation from our Piedmont and Midwest gas utilities, which are expected to grow net income at a 12% CAGR through 2024. Population and economic growth in the Southeast, coupled with the important role of natural gas in transforming our generation mix, will drive incremental investment opportunities for years to come. The Atlantic Coast Pipeline also represents important infrastructure for our customers in the Carolinas. We have included slide 17 in the appendix to provide an update on the permit status and financial considerations around the pipeline. We continue to work towards securing the required permits for the project as we await the Supreme Court's decision on the Appalachian Trail crossing. We also continue to advance discussions with customers on the project status, timeline, and cost, and are working toward updated customer agreements. balancing value to customers and a fair return for the project owners. Our expectation is that we will have a more comprehensive update on ACP mid-year. Investing in the grid, generating cleaner energy, and expanding natural gas infrastructure are critical to the customers and communities we serve and will create meaningful shareholder value for the next decade and beyond. As I look ahead, I am more confident than ever that we will deliver strong long-term returns to our shareholders and provide industry-leading service to our customers. With that, I'll turn the call over to Steve.