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Favorable Weather Drives Duke Energy's (DUK) Q1 Earnings

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Duke Energy Corporation (DUK - Free Report) reported first-quarter 2018 adjusted earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.15 by 11.3%. Earnings also improved 23.1% from $1.04 in the year-ago quarter. 

The year-over-year upside was driven by the normalization of weather conditions from a less severe winter in the year-ago quarter. Also higher investments in the electric and gas utilities boosted earnings.

GAAP earnings were 88 cents per share in the first quarter compared with $1.02 in the prior-year quarter.

 

Duke Energy Corporation Price, Consensus and EPS Surprise

 

Duke Energy Corporation Price, Consensus and EPS Surprise | Duke Energy Corporation Quote

 

Total Revenues

In the first quarter, the company’s total operating revenues were $6.14 billion, up 7.1% from $5.73 billion in the year-ago quarter. The reported figure also surpassed the Zacks Consensus Estimate of $5.74 billion by 6.9%. The year-over-year top-line improvement was driven by higher revenues at regulated electric and regulated natural gas segments.

The regulated electric unit’s revenues were $5.3 billion (up 7.6% year-over-year), representing approximately 86.1% of total revenues in the reported quarter.

Revenues from the regulated natural gas business totaled $0.7 billion (up 8.4% year-over-year).

Non-regulated electric and Other segment generated revenues of $0.15 billion, down 11.2% year over year.

Operational Update

The company’s total operating expenses were $4.78 billion in first-quarter 2018, up 10.2% from $4.34 billion in the year-ago quarter. Costs increased on higher prices of natural gas, depreciation and amortization expenses, property and other taxes as well as impairment charges. Also, costs related to fuel used in electric generation and purchased power led to higher operating expenses.

Operating income in the reported quarter fell 10.4% to $1.26 billion from $1.40 billion in the year-ago quarter.

Interest expenses rose to $0.52 billion from $0.49 billion in the first quarter of 2017.

Quarterly Segmental Highlights

Electric Utilities & Infrastructure: Adjusted income in the first quarter was $816 million, up from $635 million a year ago. The upside was driven by favorable weather, higher retail revenues, lower income tax expense as well as lower operation and maintenance expenses.

Gas Utilities & Infrastructure: Adjusted income of $158 million at this segment demonstrated an improvement from $133 million in the year-ago quarter. The improvement was driven by customer growth and increased investments.

Commercial Renewables: This segment reported adjusted income of $20 million in the reported quarter compared with $25 million in the year-ago quarter, owing to lower wind resource.

Other: The segment includes corporate interest expenses not allocated to other business units, results from Duke Energy’s captive insurance company, and other investments.

Adjusted net expenses were $95 million, up from $67 million in the year-ago quarter.

Financial Condition

As of Mar 31, 2018, the company had cash & cash equivalents of $421 million, up from $358 million as of Dec 31, 2017. Long-term debt was $49 billion at the end of first quarter 2018, almost in line with long-term debt at 2017-end.

In the first quarter, net cash from operating activities was $1,391 million, compared with $1,246 million in the prior-year quarter.

Guidance

The company reaffirmed its earnings expectation for 2018. It continues to expect its adjusted earnings per share in the range of $4.55-$4.85.

Zacks Rank

Duke Energy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

Exelon Corporation’s (EXC - Free Report) first-quarter 2018 operating earnings of 96 cents per share beat the Zacks Consensus Estimate of 93 cents by 3.2%. Quarterly earnings were 50% higher than the year-ago figure of 44 cents.

American Electric Power Co., Inc. (AEP - Free Report) reported first-quarter 2018 adjusted earnings per share (EPS) of 96 cents, missing the Zacks Consensus Estimate of $1.00 by 4%.

NextEra Energy, Inc. (NEE - Free Report) reported first-quarter 2018 adjusted earnings of $1.94 per share, beating the Zacks Consensus Estimate of $1.78 by 8.9%.

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