Abby Motsinger; Vice President, Investor Relations; Duke Energy Corp
Harry Sideris; President & Chief Executive Officer; Duke Energy Corp
Brian Savoy; Chief Financial Officer, Executive Vice President; Duke Energy Corp
Shahriar Pourreza; Analyst; Guggenheim Securities LLC
Julien Dumoulin-Smith; Analyst; Jefferies
Durgesh Chopra; Analyst; Evercore ISI
Carly Davenport; Analyst; Goldman Sachs & Company, Inc
Operator
Hello everyone, and thank you for joining the Duke Energy first-quarter 2025 earnings call. My name is [Sammy] and I'll be coordinating your call today. (Operator Instructions)
I'd now like to hand over to your host, Abby Motsinger, VP, Investor relations to begin. Please go ahead, Abby.
Abby Motsinger
Thank you, Sammy, and good morning, everyone. Welcome to Duke Energy's first-quarter 2025 earnings review and business update. Leading our call today is Harry Sideris, President and CEO; along with Brian Savoy, Executive Vice President and CFO.
Today's discussion will include the use of non-GAAP financial measures and forward-looking information. Actual results may differ from forward-looking statements due to factors disclosed in today's materials and in Duke Energy's SEC filings. The appendix of today's presentation includes supplemental information along with a reconciliation of non-GAAP financial measures.
With that, let me turn the call over to Harry.
Harry Sideris
Thank you, Abby, and good morning, everyone. Before I discuss the quarter, let me start by saying how excited I am to be with you today on my first call as CEO. Since we announced our leadership succession in January, I've had the opportunity to spend time with many stakeholders, including our customers, investors, regulators and Duke Energy teammates. These conversations centered around the same theme, the critical role Duke Energy plays in powering the lives of our communities and serving the incredible power demand facing the nation.
We are projecting low growth at levels I've never seen in my 30-year career, which will drive more than a decade of record infrastructure build. We are ready to meet the moment with a renewed focus on speed and agility and supported by the same spirit of innovation that has been at the heart of this company for over a century.
As I assumed the CEO role during this pivotal point for our company and industry, Duke Energy's mission remains unchanged. Delivering long-term value for shareholders and superior service to our customers and communities by building a smarter energy future.
Moving to the quarterly results. Today, we announced first-quarter adjusted earnings per share of $1.76, which marks a strong start to the year. These results were $0.32 above last year. driven top line growth across our electric and gas utilities. The constructive regulatory outcomes we've delivered over the last several years provide line of sight to earnings growth with minimized rate case exposure in 2025 and 2026.
We remain confident in our outlook and are reaffirming our 2025 guidance range of $6.17 to $6.42, and our long-term EPS growth rate of 5% to 7% through 2029.
Moving to slide 5. Meeting our customers' growing and evolving energy demands requires not only new generation but where possible, maintaining and enhancing our existing generation. In March, we received approval from the Nuclear Regulatory Commission to extend the operating license for our Oconee nuclear station for an additional 20 years.
With three generating units that produce more than 2,600 megawatts, Oconee is our first nuclear station to reach this milestone and will now power the Carolinas into the 2050s. As the operator of the largest regulated fleet in the nation, nuclear is foundational to our strategy, and we intend to seek similar extensions for each of our remaining reactors to extend their respective licensing periods.
In addition to extending the life of our nuclear fleet, we continue to pursue upgrade projects to efficiently increase the capacity of existing natural gas, nuclear and hydro units. Individually, these are small, ranging less than 10 megawatts up to 75 megawatts per unit. But in aggregate, they represent over 1 gigawatt of cost-effective incremental capacity to support our growing regions.
Turning to new generation. We've taken several important steps this year to advance our all-of-the-above strategy to meet growing demand and replace aging infrastructure. In the Carolinas, we commenced early site activities for our first combined cycle unit in Person County, and we filed a CPCN for a second combined cycle at the site. In Indiana, we filed CPCNs for two combined cycles in February. In Florida, we're making investments in solar and battery storage projects approved in our multiyear rate plan.
In January, we joined a public private DOE grant application led by TVA to explore new nuclear technologies. The coalition has the potential to accelerate SMR technology development and increase our access to industry learnings and best practices.
And finally, we recently announced a strategic partnership with GE Vernova to secure up to 19 natural gas turbines. This agreement provides for timely delivery of critical infrastructure to meet our enterprise-wide resource plans, and serve the growing needs of our customers into the 2030s.
Moving to slide 6. We continue to work closely with regulators, policymakers and other stakeholders to advance regulatory and legislative priorities across our jurisdictions. In the Carolinas, we've had ongoing discussions with stakeholders in both states around merging our DC and DEP utilities.
We are on track to file a merger application later this year with North Carolina and South Carolina commissions as well as the Federal Energy Regulatory Commission. The proposed merger would create significant customer savings, simplify operations and regulatory processes and add operational flexibility to our system.
We expect the application process to take about a year and are targeting January 2027 for the effective date of the merger. We also continue to advance storm securitization in North and South Carolina, and we're on track to issue securitization bonds in both states by the end of this year.
Turning to Florida. In March, we began recovering 2024 hurricane costs over 12 months. The timely recovery of storm costs was a key objective into the year. And this constructive outcome supports our commitment to a strong balance sheet.
Finally, our Kentucky Electric rate case is progressing with hearings scheduled for later this month, and we expect to implement new rates later this year. I am incredibly proud of our strong performance in the first quarter, which is a result of continued operational excellence and the constructive outcomes the team has delivered. The fundamentals of the company are stronger than ever and provide visibility growth for years to come.
With that, let me turn the call over to Brian.
Brian Savoy
Thanks, Harry, and good morning, everyone. Moving to slide 7. We delivered a strong first quarter with reported and adjusted earnings per share of $1.76, a 22% increase over the first quarter of 2024. Within the segments, Electric Utilities & Infrastructure was up $0.33 compared to last year. Growth was driven by higher sales volumes, improved weather and the implementation of new rates partially offsetting these items were higher interest expense and depreciation.
Moving to Gas, Utilities and Infrastructure. results were up $0.08 compared to last year, driven by new rates at Piedmont, North Carolina. And finally, the other segment was down $0.08, primarily due to higher interest expense. Overall, we are very pleased with the first quarter results, which were in line with our expectations and reflect the strength of the regulatory outcomes and operational performance we have consistently delivered.
Turning to slide 8. Weather-normal volumes increased 1.8% versus last year, in line with our full-year projection of 1.5% to 2%. Residential volumes were up over 3% in the quarter. reflecting both customer growth and higher usage. We continue to see robust customer growth through the first quarter, concentrated in the Southeast and Indiana.
As we look ahead, we continue to expect load growth to accelerate beginning in 2027 as economic development projects come online. Our economic development pipeline continues to grow and includes advanced manufacturing projects across multiple sectors as well as data centers.
We're streamlining processes across the organization to accelerate projects through the pipeline, which is yielding results. In April, we signed new letter agreements for nearly 1 gigawatt of data center projects and advanced manufacturing projects continue to ramp. The pipeline remains robust. And we continue to take a risk-adjusted approach as we evaluate which projects to include in our forecast.
Turning to slide 9. As we've demonstrated over many years, our commitment to our current credit ratings and a strong balance sheet will remain a top priority as we execute our growth objectives. We are delivering on all credit supportive initiatives and are firmly on track to achieve 14% FFO to debt this year, and we expect to improve above 14% over the five-year plan. This provides over 100 basis points of cushion above our Moody's downgrade threshold and over 200 basis points above our S&P downgrade threshold.
As we disclosed in February, we expect to issue $1 billion of common equity this year via our DRIP and ATM programs. In the first quarter, we took advantage of a strong market pricing just over $530 million, more than half of our annual target. We've also completed close to 40% of our planned long-term debt issuances for 2025, and are on track to receive storm securitization proceeds by the end of the year in the Carolinas.
Before I close, let me take a moment to talk about progress on our capital plan. We're continuing to advance our grid improvement plans. And as Harry highlighted, we're investing in our existing fleet and hitting a new gear in building generation. We invested more than $3 billion of capital in the quarter, and we're on track for $15 billion for the full year. As we think about our capital plan going forward, we're evaluating the impact of tariffs.
It's important to remember that tariffs primarily affect capital, and the majority of our capital spend is American labor, which is not subject to tariffs. We currently estimate the impact of tariffs to be about 1% to 3% of our five-year capital plan. And we are confident in our ability to further minimize the impact leveraging our size and scale to work with suppliers across our diverse supply chain.
Moving to slide 10. We remain confident in delivering our 2025 earnings guidance range of $6.17 to $6.42 and 5% to 7% earnings growth through 2029. We with the potential to earn the top half of the range as load growth accelerates in the back end of the plan.
Our track record of constructive regulatory outcomes provides a solid foundation and minimizes near-term regulatory exposure in our financial plan. We are well positioned to achieve our growth targets, which combined with our attractive dividend yield, provide a compelling risk-adjusted return for shareholders.
With that, we'll open the line for your questions.
Operator
Thank you very much. (Operator Instructions)
Shahriar Pourreza, Guggenheim Partners.
Shahriar Pourreza
Hey guys, good morning.
Brian Savoy
Good morning, Shar.
Shahriar Pourreza
Morning. Just I guess, first, it's -- obviously, it's been reaffirmed, but you're seeing, obviously, a fairly strong step-up in '27. You're signing more letters of agreements, '27 isn't that far off. I guess at what point could we start seeing some guideposts around incremental CapEx opportunities above your base plan like some of your peers have been doing.
So range of maybe possible upside CapEx opportunities that can go into plan as more deals are signed. I guess, are you considering this type of placeholder disclosure and could EEI be the podium for that? Thanks.
Harry Sideris
Yeah. Thanks for that, Shar. I'll start off and turn it over to Brian for any feedback he has on it as well. So we just updated our plan in February, as you know, $83 billion for the next five years, half of that going into the grid, half of it for a generation build.
We got several updates coming up with our IRP in the Carolinas being updated. We continue to work our pipeline. It's stable and growing, and as that continues and our updates to our IRP never say that order. We will continue to look at our plans, but we do have a wealth of investment opportunities and growth opportunities, and we'll continue to look at that and update you as that comes along.
And Brian, do you have anything to add?
Brian Savoy
Yeah, I would add, we're updating our resource plans, and we just actually filed our 10-year site plan in Florida, which calls for more resources than our previous plan. And Shar, we've kind of gotten on this annual cycle of updating capital in February.
If there is a catalyst, we will definitely update the investment community. But until then, I would kind of look to February as our major capital update cycle, but we take all these things into consideration when we update.
Shahriar Pourreza
Okay. Got it. And then just maybe a question for Brian. Just on credit metrics, I mean, obviously, the key thing is the visibility is improving. You guys are monetizing the tax credit you're getting storm cost recoveries.
I guess when can we start seeing some more specificity around actual target ranges within the plan versus the 100 basis points, 200 basis guidance you guys have been out there for some time. Is there a point when you can start to disclose around actual ranges you guys decide to -- you can land that during the trajectory? Thanks.
Brian Savoy
I appreciate the question, Shar. And it's something that we've been discussing a lot internally as we've continued to improve the credit profile of Duke and growing the operating cash flow and clearing some of these items that are in front of us like storm recovery and storm securitization. So I think we're going to continue to evaluate it, but we'll see this within maybe our next cycle in February, we'll give a more defined targeted range on where we would be on the credit.
Shahriar Pourreza
Okay. That was actually my question. I appreciate that. Thanks, guys.
Harry Sideris
Thank you.
Operator
Julien Dumoulin-Smith, Jefferies.
Julien Dumoulin-Smith
Hey, good morning team. Thank you guys very much for the time. Hey, pleasure. Hey guys, just to follow up a little bit on what Shar have said. Picking at here. I mean 1 gigawatt of signed deals in April alone, quite a statement there.
Just how are you thinking about the statement with respect to the cadence that you had contemplated? I mean, obviously, as you say, you've seen this accelerated load growth, but is it actually accelerating actively versus what you guys did contemplated initially.
Maybe I'm not asking specifically about the CapEx, but just in terms of the cadence of adding a single gigawatt in a single month of data center deals specifically, I mean, are you seeing more than what you even talked about back in February? Or maybe another way to ask that is, where are you within that range of the 3% to 4% that you laid out just a handful of months ago as you see these data points coming in?
Harry Sideris
Yeah, Julien. Our pipeline continues to be robust and continues to grow. And we've really focused on accelerating getting projects through what we call our funnel to get them from the pipeline through these letter agreement stages to shore them up. So this 1 gigawatt that we just signed is working through our process. It's been contemplated in our plans.
And we'll continue to work that large pipeline that we have to move more of these through our funnel to look at how we go to in the future. So we feel very comfortable and confident that we have a great pipeline, and we continue to find ways to work through that faster for our customers.
Julien Dumoulin-Smith
Got it. Understood. And then if I can pivot slight differently. I mean big announcement the other day with your friends at [GV] here. How do you think about the '19 turbine commitments, I mean, just against what you guys have in the plan.
How do you think about that juxtaposing versus what's formal in the plan versus what's possible here again, I know that it's not a formal commitment on your side per se, but just curious how that fits and what that might suggest about future activities and future generation needs?
Harry Sideris
We were very pleased with the partnership with GE. We talked about meeting the moment at Duke and serving the tremendous load growth that we have ahead of us, and innovative agreements and framework agreements like this gives us the flexibility as we're moving projects through that funnel, that we're able to have the supply chain shored up in terms of turbines and other agreements that we have so that we could quickly serve these customers as they want to come on. So this is important to shore up and give us the flexibility as we move these projects into fruition that we're able to deliver them to the customer quickly because that's what they want. So these agreements are great.
Julien Dumoulin-Smith
Got it. Excellent. In '25 seems like you're trending well already. I mean, too early to talk about, shall we say, moving within the range, but how do you think about putting more latitude against shoring up where you are against the longer-term outlook, just even '26 here in derisking some of the future years?
Brian Savoy
Yeah. Julien, I think we look at our five-year plan and our 5% to 7% growth and feel very good about that growth outlook. And good start to '25 obviously helps every year in front of it. So we think that 2026 planning has been underway for many months now as we think about the years ahead, and we're well positioned to deliver on that growth range as we look at the plan.
Julien Dumoulin-Smith
Great, guys. Alright, thank you so much.
Brian Savoy
Thank you.
Harry Sideris
Thank you.
Operator
Durgesh Chopra, Evercore ISI Group.
Durgesh Chopra
Good morning team. Thank you for giving me time. Congrats Harry, once again. (multiple speakers) you guys have discussed the DEP and DEC merger in the past. Maybe just a little bit more color, what are the financial implications of that merger, when approved cost savings? I know there's going to be some operations streamlining. But just any color you can share there would be appreciated.
Harry Sideris
Yes, sir, yes. We're excited about the opportunity to merge our DEC and DEP utilities, something we've contemplated since the merger back in 2012. Stakeholders are very supportive of this. It does generate a lot of savings over time for our customers over $1 billion. So that will help with the affordability to our rates for our customers going forward.
It really focuses on operational savings, fuel savings from running a combined system, managing our reserve margins as a whole instead of separately allowing us to put plants in the best location and optimize that. It's less regulatory proceedings, which are regulators like as well as us.
So it continues to provide a lot of benefits for our customers. So we continue to work with our stakeholders on finalizing the details. Like I mentioned earlier, we plan to file later this summer with the North Carolina and South Carolina commissions as well as FERC and look to be running as one utility in January of 2027.
Durgesh Chopra
Got it. Okay. Sounds like a ton of room for making improvements on the customer front. Great. Just one quick follow-up on the data center, 1 gigawatt signing. Can you just size how many customers is that? Just trying to get a flavor for, are these one or two large customers or just the megawatts per customer, if you will? Thank you.
Harry Sideris
Yeah. The 1 gigawatt we talk about is actually two customers.
Durgesh Chopra
Okay. Thanks so much.
Operator
Carly Davenport, Goldman Sachs.
Carly Davenport
Hey, good morning, thank you for taking my question. (multiple speakers) -- good morning, thank you for taking my question. maybe just to start, [IRP] has been pretty topical throughout earnings season here as we look at some of the potential legislation coming through reconciliations.
Can you just provide your latest views on the outlook both for transferability and the future of the tax credits that support a lot of these renewables projects? And can you just remind us in terms of what is actually baked into the financial plan from a transferability perspective?
Harry Sideris
Yeah, I'll take that one, Carly. We appreciate the -- what Congress has ahead of them and how many priorities they'll be weighing as they work through the budget reconciliation process. We tend to look at this from the customers' perspective, and really our overarching objective is to maintain affordability for our customers, and that's what we've framed our advocacy around.
The savings our customers receive from these energy credits fall right in line to what the President wants to do, which is delivering on this promise to reduce power bills across the country. As you know, each one of these dollars that we earn in energy tax credits goes back to our customers.
The nuclear tax credits are most important to us. Our well-run, low-cost nuclear plants earn over $500 billion of tax credits that go directly to reducing our customers' bills. Nuclear has broad support in Washington. And we were pleased to see last week 26 representative sign a letter, stressing the importance of the nuclear tax credit and transferability to the President's objective of affordable and reliable energy. So we continue to work with folks in Washington to advocate to help our customers lower their bills, reduce credits, and we will continue to do that as they work through the process.
Carly Davenport
Great. I appreciate that. And then maybe just as we think about the macro, is there anything that you're seeing or hearing from, in particular, your industrial customer base in terms of activity levels potentially being impacted by a higher degree of economic and policy uncertainty at this point?
Brian Savoy
It's obviously the topic everyone is talking about, Carly, and we're in close communication with our large customers as we always are. And we've not seen any changes to their production schedules or expectations for '25.
But I would say, there's somewhat of a cautionary stance, right? Because (inaudible) everybody is waiting for the finalization of where the tariff policies might land and their inputs reliance on the global supply chain, all factor into that equation. So I would say that today, it's no change, no need jerk reactions from our customers, but kind of a cautionary stance.
And that's -- that makes sense given where we are. So we think our 1.5% to 2% load growth for 2025 is intact fully in the first quarter was evidence that we're right in line with that.
Harry Sideris
We also see the potential, Carly for some of our customers to increase production because the tariffs actually help their business, think about steel producers and those type of folks. So we're in contact with some of those customers as well.
Carly Davenport
That's great. Very clear. Thanks so much for the time.
Harry Sideris
Thank you.
Operator
We currently have no further questions, so I'd like to hand back to Harry Sedaris for some closing remarks.
Harry Sideris
All right. Thank you everyone, and thank you for your investment in Duke Energy. Our IR team is standing by if you have any further questions during the day, and I hope everybody has a great day.
Operator
This concludes today's call. Thank you very much for joining. You may now disconnect your lines.
