01—Abstract
Summary
Summary of the 10-K filed February 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Duke Energy's FY2023 10-K shows a company in transition to a fully regulated utility.
GAAP reported EPS was $3.54a (vs. $3.17 in 2022), and adjusted EPS rose to $5.56 (vs. $5.27), driven by rider growth, favorable rate case outcomes, lower O&M, and lower taxes, partially offset by higher interest and depreciation, unfavorable weather, and lower volumes. Net income available to common stockholders was $2,735 million. The company closed the sale of its Commercial Renewables utility-scale solar/wind and distributed generation groups in October 2023, with a $1.7 billion pretax impairment on the disposal groups driving a $1.46 billion loss from discontinued operations.
Operating revenue was $29.1 billion, and operating cash flow rose to $9.9 billionb from $5.9 billion. The investment story centers on a capital plan of roughly $12.4 billion in 2024, $14.2 billion in 2025, and $14.8 billion in 2026, with management expecting $170 to $180 billion of regulated capital over the next decade. Growth is supported by recent constructive North Carolina rate orders (including a 10.1% ROE for Duke Energy Carolinas and a 9.8% ROE for Duke Energy Progress), a new multiyear rate plan framework under HB 951, and rising load forecasts from economic development.
Balance sheet risk remains meaningful: total debt is about $79.5 billionc, the company plans to issue roughly $6.9 billion of debt in 2024, and it continues to dividend-fund around $3.2 billion annually. Key overhangs include coal ash closure costs estimated at $7 to $8 billion, pending appeals of the NCUC order, decommissioning and license renewal uncertainty, and the timing of coal retirements and the 2050 net-zero goal. Investors should weigh the earnings and dividend growth profile (targeting a 60% to 70% payout on adjusted EPS, with roughly 2% annual dividend increases) against heavy capital needs, rising interest expense (up to $3.0 billion), and dependence on timely regulatory recovery.
02—Key points
Key Highlights
- GAAP EPS of $3.54 vs. $3.17 in 2022; adjusted EPS of $5.56 vs. $5.27 (+5.5%), within stated guidance.
- Capital plan of $12.4B (2024), $14.2B (2025), and $14.8B (2026), with ~$170-180B of regulated clean energy investment over the next decade.
- Completed the sale of Commercial Renewables utility-scale solar/wind and distributed generation in October 2023, leading to a $1.46B loss from discontinued operations including a ~$1.7B pretax impairment.
- Operating cash flow of $9.9B, up from $5.9B, largely due to recovery of $1.5B in deferred fuel costs and working capital timing.
- Constructive NC rate orders: Duke Energy Carolinas received a $768M increase at a 10.1% ROE; Duke Energy Progress received $494M at 9.8%, in the first multiyear rate plan under HB 951.
- Balance sheet: total debt of ~$79.5B, $4.9B available under the $9B Master Credit Facility, and a planned ~$6.9B of 2024 debt issuance; dividends paid of $3.24B (97th consecutive year of cash dividends).
- Coal ash closure costs estimated at $7-8B (about $4B spent through 2023), with pending NCUC appeals and goodwill risk at Duke Energy Ohio's GU&I unit (~$324M carrying value).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 23, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $28.67B$28.68B | 0.0% |
| Operating Expenses | $22.04B$22.78B | −3.2% |
| Operating Income | $7.07B$6.01B | +17.6% |
| Interest Expense | $3.01B$2.44B | +23.6% |
| Net Income | $2.84B$2.55B | +11.4% |
| EPS (Basic) | $3.54$3.17 | +11.7% |
| EPS (Diluted) | $3.54$3.17 | +11.7% |
| Shares Outstanding (Basic) | 771.00M770.00M | +0.1% |
| Shares Outstanding (Diluted) | 771.00M770.00M | +0.1% |
05—Questions
Frequently Asked Questions
How did Duke Energy's earnings perform in 2023?
GAAP reported EPS was $3.54, up from $3.17, and adjusted EPS was $5.56, up from $5.27. Growth came from riders, retail margin, favorable rate cases, lower O&M, and lower taxes, offset by higher interest and depreciation, weather, and lower volumes. The GAAP figure includes a $1.46B loss from discontinued operations tied to the Commercial Renewables sale.
What is the company's capital investment outlook?
Projected capital and investment expenditures are $12.35B in 2024, $14.2B in 2025, and $14.8B in 2026, with EU&I (electric utilities) accounting for most of the spend. Management expects to deploy roughly $170-180B over the next decade, primarily for clean energy transition investments in generation, transmission, and distribution.
Is the dividend sustainable?
Duke paid $3.24B in dividends in 2023 and has raised its dividend about 2% annually. It targets a 60%-70% payout ratio based on adjusted EPS. Dividend payments depend on earnings, capital needs, and Board discretion, and the company says it expects to continue growing the dividend.
What are the main risks investors should watch?
Key risks include coal ash closure costs ($7-8B estimated total), uncertainty in regulatory cost recovery, the NRC license renewal process for nuclear plants, pending appeals of the December 2023 NCUC order, and the cost of meeting net-zero 2050 goals. Rising interest rates and a large debt load (about $79.5B) also increase financing costs and sensitivity to credit ratings, which are currently investment grade.
What happened with the Commercial Renewables business?
Duke sold its utility-scale solar and wind group to Brookfield and its distributed generation group to ArcLight, both closing in October 2023 for combined proceeds of roughly $1.3B gross. The company recorded about $1.7B in pretax impairment charges and expects to complete remaining asset dispositions in the first half of 2024. The company now describes itself as a fully regulated utility.
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