Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to Duke Energy Corporation's Second Quarter Earnings Conference Call. Operator provided instructions. I will now hand the conference over to Mike Switzer, Vice President of Investor Relations and Corporate Development. Mike, please go ahead.
Thank you, Lucas, and good morning, everyone. Welcome to Duke Energy's Second Quarter 2026 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.
Thank you, Mike, and good morning, everyone. It's great to be with you for our second quarter earnings call. Today, we announced adjusted earnings per share of $1.43, continuing our strong execution in the first half of the year. The results were driven by growth at our Electric Utilities as we continue to make critical infrastructure investments to meet growing customer demand in our service territories. With our largest quarter still ahead of us, we remain firmly on track to achieve our 2026 guidance range of $6.55 to $6.80. We are also reaffirming our long-term earnings per share growth rate of 5% to 7% through 2030, and we are more confident than ever that we will deliver in the top half of the range beginning in 2028 when we expect to see accelerated growth from the economic development projects we have secured under ESAs. Growth continues to define our service territories. CNBC recently named Ohio the top state for business with four of our states ranked in the top 10, and North Carolina was recognized as the top economy for its strong economic and job growth. To meet this record demand and to continue long-term value for our customers, communities, and shareholders, we're executing on the industry's largest regulated capital plan, deploying more than $1 billion per month. We are laser-focused on disciplined execution and responsible financial stewardship as our priority has been and always will be providing customers reliable power at the lowest possible cost. Moving to Slide 5. We are advancing our strategic priorities, including regulatory execution. Last month, we were pleased to reach a comprehensive settlement with North Carolina Public Staff and other interveners in our DEC rate case, building on our long track record of collaborating with stakeholders to achieve constructive regulatory outcomes. This agreement demonstrates our commitment to cost effectively serve our customers while continuing to support investments needed to improve reliability and modernize our generation fleet. The settlement includes a 9.8% ROE, 53% equity capital structure, and the continuation of the multiyear rate plan framework. The agreement also retains the earnings sharing mechanism that allows us to earn 50 basis points above the allowed ROE up to 10.3%. Finally, we agreed to pursue discussions with intervenors to reach a substantially similar settlement framework for the DEP rate case. Discussions are ongoing, and we'll update you on the progress in the coming weeks as we prepare for the hearing scheduled for August 11. If approved by the commission, revised customer rates are expected to remain below the national average. We expect orders on both cases by mid-November. As outlined on Slide 6, we continue to use every tool we can to manage costs for our customers while delivering the high quality of service they expect. Building on the tax credit sale agreement and the DEC/DEP combination savings we highlighted in Q1, we pursued an innovative strategy for the accelerated flowback of tax credits for a Florida battery project that will go online next year. By recognizing the tax credits in one year rather than over the life of the project, we're offsetting a base rate increase for customers in 2027. We also submitted an application for Department of Energy loans in May, which could represent billions of dollars of customer savings through reduced interest costs on eligible projects. We recently introduced the Customer Protection Plus commitment, which reinforces the way we've already been doing business with large customers and reflects the terms of large load tariffs progressing in our jurisdictions. Our contracts ensure large users of energy pay the cost of serving their facilities, and these projects are expected to deliver billions of dollars in benefits for existing customers over time. The commitment is built on three core priorities: preserve reliability; power responsible growth; and produce shared value. And it aligns with the goal of the Ratepayer Protection Pledge, which we signed in late July, joining many of the hyperscale customers we serve. We appreciate our customers' engagement and the strong alignment across industries on this timely issue. We are also proud of our long-standing track record in cost efficiency, which is driven by a culture of continuous improvement. In 2025, we ranked third amongst our electric industry peers for non-generation O&M per customer, and our efforts to manage our cost structure strengthen our ability to deliver for both customers and shareholders. We've always put customers first. And through these long-term commitments, financial protections and careful planning, we're working to ensure growth supports reliability and creates lasting value. Slide 7 shows our continued progress on our record generation build, now on track to add 15 gigawatts of capacity by 2031, which reflects additions from our latest 10-year site plan in Florida. Starting with regulatory updates, we recently concluded hearings in North Carolina on the 2025 Carolinas Resource Plan. With newly signed ESAs, the load forecast has increased to the high load scenario, which further confirms our view that all near-term resources in the Carolinas are needed. We expect an order from the North Carolina Commission by year-end. As we look ahead, the Carolinas Resource Plan underscores the role nuclear will play in our all-of-the-above strategy. As the operator of the largest regulated fleet in the U.S., we continue to see significant value in our existing nuclear fleet as we complete uprates and work to extend the lives of our existing units. We have subsequent license renewals approved by the NRC for two of our plants, and we're preparing to file the SLR application for the Brunswick Nuclear Plant by the end of the year. We are also evaluating the potential for new nuclear to meet future demand. We want to continue to emphasize that additional financial protections are needed before we would propose a new nuclear project. Any structure to advance new nuclear must address first-of-a-kind and supply chain risks, provide financial risk protections for our customers and our investors and ensure a strong balance sheet during the construction cycle. And lastly, we're executing on the construction of new dispatchable capacity, including increasing the number of gas turbines available under our framework agreement with GE Vernova to 26 to align with the next phase of build in the IRPs. The first turbine was delivered to our Person County combined cycle site in July, and the second will be delivered later this year. Our gas portfolio has approximately five gigawatts under construction and an additional 2.5 gigawatts advancing through development. We've contracted with EPC partners, and we're closely monitoring construction milestones, enabling us to check and adjust in real time. As we continue to scale, we will work with our EPCs to ensure crews can seamlessly move from one project to the next, and we're prepared to leverage operational learnings and efficiencies built throughout the construction cycle. We're moving with speed and agility to ensure we complete these projects on time and on budget, maximizing the value for those we serve. We have significant construction experience and our scope and scale give us full confidence in our ability to execute the work ahead. With that, let me turn the call over to Brian.
Thanks, Harry, and good morning, everyone. As shown on Slide 8, we continue to execute our strategy at an accelerated pace while delivering strong growth with reported and adjusted earnings per share of $1.38 and $1.43, respectively, compared with $1.25 for both reported and adjusted earnings per share in the prior year. Electric Utilities and Infrastructure was up $0.15, driven by continued customer growth as well as infrastructure investments to reliably serve our growing jurisdictions. These drivers were partially offset by higher depreciation expense associated with our growing asset base and higher interest expense. Gas Utilities and Infrastructure was largely flat year-over-year, consistent with expectations in a shoulder quarter. Finally, the Other segment was up $0.03 compared to the prior year, primarily due to the expected benefit of lower interest expense resulting from the Tennessee and Florida transaction proceeds, which have reduced holding company financing needs as well as higher market returns. Favorable weather has also contributed to our strong results through midyear with a colder-than-normal first quarter, then quickly shifting to a hot second quarter. Our generating assets performed well during these periods of high demand, contributing positively to our results. As we look forward to the back half of the year, we may have the opportunity to reinvest some of the weather benefits back into our generating facilities to ensure these assets continue operating well for our customers. This would be consistent with our demonstrated ability to exercise O&M agility in both directions over the past several years. The robust growth in the quarter is a result of accelerating execution of our strategy and the strength of our fully regulated utility model, which serves attractive jurisdictions with vibrant economies and constructive regulatory environments across the Southeast and Midwest. Overall, we are extremely pleased with our performance through the first half of 2026 and are firmly on track to achieve full year results within our EPS guidance range. Turning to Slide 9. We continue to progress additional large load projects through the pipeline. We have now secured 7.8 gigawatts of electric service agreements with data center customers. The Customer Protection Plus commitment we announced in July reinforces the foundation from which we engage with large load customers. The ESAs we've signed protect existing customers today and deliver value for everyone over time as fixed costs are spread over a larger base. Beyond data center activity, we continue to see strong interest from a diverse set of commercial and industrial sectors, including life sciences and advanced manufacturing. In just the first half of this year, we've secured economic development wins representing $5 billion of investment, supporting over 9,000 jobs across our service territories. This broad-based economic development success provides us with increasing confidence in our long-term load growth projections and underscores the need to bring additional generation onto the system to reliably serve our customers. Moving to Slide 10. Our teams are working with prospective customers to advance large load projects. And we continue to expect the remainder of the 15.4 gigawatt pipeline to be converted to ESAs by the first half of 2027. As Harry mentioned, the contracts we've signed to date in the Carolinas have increased the load forecast to the high load case. We continue to advance our late-stage pipelines in other jurisdictions as well. As additional contracts are signed, there is $5 billion to $10 billion of upside to our current 5-year capital plan to support additional generation and transmission needs, particularly in Indiana and Florida. Our first priority will always be to protect existing customers and ensure large loads provide value to the system. We look forward to sharing more as the pipeline advances over the coming quarters. As you can see on the right side of the slide, customers are also making strong progress building their facilities with several moving to vertical construction. We continue to expect these customers to begin taking energy as early as the second half of 2027 and into 2028 and ramp into their full contracted load through the early 2030s. Infrastructure to support these customers is on track. As a reminder, our contracts contain minimum take provisions, which serve as the basis for revenue growth projections. This is just one of the many ways we are protecting existing customers while ensuring the growth ahead provides shared benefits for all. Turning to the balance sheet on Slide 11. We are on track to achieve our FFO to debt target of 14.5% for the year. Longer term, we expect to reach 15% FFO to debt as additional proceeds from the DEF minority interest investment are received. This FFO to debt target has substantial cushion to our downgrade thresholds, provides financial flexibility and serves as a solid foundation as growth accelerates later in the 5-year plan. We've also priced $600 million under the ATM program so far this year, which will settle at the end of 2027. We are taking a proactive approach to equity funding, locking in attractive pricing today to derisk our future equity needs. Finally, we understand the importance of the dividend for our investors. In July, we increased our quarterly dividend payment, marking over 20 years of consecutive annual dividend increases. The 2% increase is consistent with growth in recent years and shows our ongoing commitment to growing the dividend. Let me close with Slide 12. We are executing our strategy to seize growth opportunities, expand our generation fleet and work with stakeholders to reach constructive regulatory outcomes that support critical investments while keeping costs as low as possible. We are on track to achieve our 2026 EPS guidance range of $6.55 to $6.80 and 5% to 7% EPS growth through 2030 with confidence to earn the top half of the range beginning in 2028. We have an extensive runway of capital investments that continue to produce value for customers and position us to deliver on 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.
Questions and answers
Your first question comes from the line of Shahriar Pourreza with Wells Fargo.
So Harry, obviously you guys are highlighting additional CapEx up to $10 billion. You've got 15 gigawatts in late stages. You're already sort of at the top end of the EPS CAGR. How are you thinking about the third-quarter update? Is there a point where we could see some upward pressure in the CAGR? And how are you thinking about messaging around that, especially as many of your peers are now focusing on the plus part in their growth ranges? Can you maybe provide an out-of-cycle update as we're heading into Q3, like some of your peers?
Yes, Shahriar. We have a high degree of confidence in the 5% to 7% and the top half of that range starting in 2028 when some of these loads start coming on and ramping. This is a very dynamic environment. We feel very good about our 15 gigawatts pipeline. They're advancing, but these negotiations are taking a little longer at times because they're very complicated transactions. So we want to continue to work through that. We feel very confident we'll be able to land more of those. We're looking at landing all of that 15 gigawatts by the first half of next year, and we're on track to do that. We'll continue to evaluate where we need to be on our earnings per share growth rate, and we typically update that in the fourth quarter. But if anything changes materially like we did last year, we'll update you on that as we see fit. Our focus right now is to continue executing, getting those large loads signed to ESAs, making sure they're protecting our customers and paying their way as they go forward.
Got it. That's helpful. And then just maybe sticking with Indiana, there's been a lot of rhetoric in the state around affordability. You've seen what's happening with the commissions. With the potential opportunities that you guys have to serve that large load, would you consider a genco-type structure given the benefits around perhaps bypassing the CPCN process and flowing the savings back to customers more visibly? How are conversations evolving around that structure?
Affordability is top of mind. Our customers are struggling with gasoline prices, rent prices, and health care prices. So we share the Commission's and the Governor's focus on affordability and making sure that customers are protected from these large loads and that we're providing reliable and low-cost service to our customers, and we'll continue to do that. On the genco side, we are looking at that. We have looked at that in detail in the past and didn't feel like we needed that to accomplish what we're doing. But as these large loads are signed, that may be something that we're going to revisit in the future to be able to provide financing as well as another layer of protection for our customers. So we'll continue to monitor that. As these pipelines advance, we'll look into that deeper.
Your next question comes from the line of Nicholas Campanella with Barclays.
So just on the potential $5 billion to $10 billion of additional capital for the large load in Florida and Indiana. As we prepare for the roll forward in another five years, how much of that do you think is eligible for the five-year plan versus being well into the mid-2030s? How much of the $5 billion to $10 billion should we be thinking about can make its way into the roll forward?
Yes, Nick, it's a great question. When we bracketed the $5 billion to $10 billion, we contemplated this is within the current five-year plan. We're going to roll forward the plan in February, which obviously capital is accelerating as we are investing more into the late part of the decade than we are right now. But this is incremental to that. So think about this as the four years left in the five-year plan that we're executing today as capital upsides. And that will be triggered when the ESAs are signed and the requisite generation and transmission is modeled for those contracts.
Okay. Great. I appreciate that. And then on the execution side, you're already kind of executing and constructing five gigawatts of generation projects. Many in the industry will be doing similar things in the coming years. Any bottlenecks or issues you're seeing and how you're addressing those as you prepare for the gas generation build? What should we be prepared for?
Building things has always been in Duke's DNA, and we're really good at it. We've never stopped building things throughout the last couple of decades. We've been building gas plants and other facilities. So we feel this is a strength for us and a competency for us. We've been planning for this generation build cycle for many years. We've put in programs and programmatic ways of doing this with EPC contracts where we're using one EPC vendor in the Carolinas to be able to move the resources from site to site. We're buying the same materials, so the sites are identical, which gives us opportunities for synergies in how we build these things, both on the cost side and on making sure that the schedule and quality are met. We feel really good about our plan and our ability to execute as well as the oversight that we're putting in using AI tools to monitor construction deadlines and progress. So we feel really good that we're going to be able to deliver reliable service for our customers and also do it at a low cost.
Your next question comes from the line of Julien Dumoulin-Smith with Jefferies.
Maybe just to kick off a little bit more on Indiana. Just set expectations, if you can. We're having some hearings later this week on the backdrop of affordability and implications. I'd love your open-ended comments on that front here just at the outset, especially given you guys are earlier in the slate of contemplated cases.
Good question, Julien. Like I said earlier, we share the Commission's and the Governor's focus on affordability and transparency for customer communications about what came out of their hearings and listening sessions. We have the same goals in mind. We want to make sure that we support our customers with reliable service at the lowest cost possible. We will collaborate with the Commission and other intervening parties as we go through the affordability report and we plan for our upcoming MYRP filing. We start in a strong position. We have great reliability, great storm response, and low cost in Indiana. We're very active in economic development in the state and have been successful in bringing jobs and other tax benefits to the communities that we serve, and we continue to do that. We feel the Governor, the Commission, and other intervening parties want to continue Indiana's productive business environment and make sure that they're bringing in jobs and economic development. So we feel like we're going to be successful because we all have the same goals in mind.
Excellent. And I know you commented a little bit about the new nuclear efforts. Can you expand on how you all see this coming together? You've articulated near-term progress on the application, but how does this come together practically? From your vantage point, what should we be expecting commercially?
We're focused on two things. First, maximizing our current assets: we're doing about 300 megawatts of upgrades to our current units and we're extending licenses to an additional 20 years to 80 years of life. We have two subsequent license renewals already approved by the NRC and we're filing the third one by the end of this year. On the new nuclear side, we're working with government officials, state officials, hyperscalers and other stakeholders to see what can be done to offset financial and supply chain risks for a new project. We will not move forward until we have a good plan on how we can offset that risk to protect our customers as well as our investors. Those discussions are continuing. The federal government has been very open to discussions and creative solutions, and we'll continue to have those discussions as we move forward. But we're not in a position yet to make a decision on new nuclear.
What's the timeline on seeing commercial outcomes for new nuclear? There's a lot of noise in the system and I want to set expectations.
We're focused on going through the process and making sure that we can offset that risk. There's no real timeline; we're not putting ourselves under pressure of a timeline. We want to make sure that we offset the risk first and foremost.
Your next question comes from the line of Carly Davenport with Goldman Sachs.
Maybe just to start on the large load opportunity that you've highlighted in Indiana and Florida. Have you provided any geographic breakdown in that high-confidence load pipeline in terms of how many gigawatts are in those two states versus the Carolinas?
Yes, that's our entire late-stage pipeline. The majority of it is in Florida and Indiana, but we have not broken it down specifically. There are still some additional opportunities in the Carolinas as well as Ohio and Kentucky. Brian, I don't know if you wanted to add anything.
No, I think that nailed it.
Great. And then on the additional six gas turbines you secured this quarter as you think about the next phase of resource needs, are you also in progress on securing gas supply for any incremental gas plants as part of that next phase? Is that something you could see as a potential constraint to the build-out?
That's part of our planning as we're laying out both the supply chain side, the fuel side, and the labor side. We have a team that works on advanced planning for gas supply for the new generation that we're going to need. We have all the gas that we need through early 2030 secured, and we continue to work with our vendors on providing additional gas beyond that. We feel confident that we'll be able to nail that down as those generation projects get further in their build.
Your next question comes from the line of Richard Sunderland with Truist.
Given the ATM progress year-to-date, how are you thinking about pacing future equity? Would you consider doing something upfront to derisk outer years of your plan?
Richard, we're being very opportunistic with the equity issuances. As I mentioned in my remarks, locking in attractive pricing when the market is there for us. You could see us continuing to leverage the ATM as we move through the plan, the DRIP program and being smart about equity issues over time, but no large block equity planned in our five-year plan.
Got it. That's helpful. And then a separate element on Indiana: there's been some talk around the sale of the Cayuga coal plant. Can you offer any update on that and how that might fit with the state's goals?
As part of the settlement to build the natural gas facility we're building there, we offered up a study on what it would take to continue to operate that facility and sell it to a third party. That study just came in last month. It's being evaluated, and we'll determine what we need to do with that going forward. Our focus is on getting that gas plant up and running, and then we'll see what happens with the coal plant from there.
Your next question comes from the line of Steve Fleishman with Wolfe Research.
First, a follow-up on the new nuclear. Any update in your thoughts between AP1000 large-scale versus SMR? Can you confirm whether you're involved in long-lead time deals?
On that first part, we're keeping our options open. We filed an early site application for SMRs at our Belews Creek facility. We're involved with OPG's project up in Toronto, monitoring their progress and any learnings. We also have a COL license at our Lee facility for two AP1000 units. So we continue to look at both options. Our main focus is how to offset the financial risks for our customers and our investors. I would say that the AP1000, because of the size and the generation need we have, seems to be in the lead. But again, we're working on analysis and making sure we can off-take the financial risk. The DOE has not shared which utilities are participating in their latest announcement, but we're glad they're looking at arrangements to derisk some of the supply chain for future nuclear, and we continue to have discussions with the government on offtaking that financial risk.
Okay. And then for Brian, on long-term cash flow: it seems like you're capturing a lot of tax credit cash flow from nuclear and batteries in the near term by recognizing them earlier. What happens in later years? Does that roll down and then the cash flow from recovery of all these new investments ramp up? How should we think about the shape of cash flow?
That's a very good question and it's something I'm laser-focused on. The cash flow earnings power of Duke has increased materially. Think back to a low point in 2022 during the fuel crisis. As we look out, we're flowing tax credits back to customers on an accelerated pace and it's going to catch up with earning the tax credits kind of late in the '20s — 2028, 2029. We about hit parity on the nuclear PTCs, which is a huge contributor to Duke's tax credit profile, and it's going to save cost for customers. As we get into the early '30s, that dynamic will turn, but the earnings power on the investments we're making will more than offset that. So cash generation continues to grow and it's durable well into the late '30s. I don't see any slowing down of the cash flow; it just changes complexion from earning some tax credits now to earning returns on the investments later.
This concludes the Q&A session. I will now turn the call back to Harry Sideris for closing remarks. Harry, please go ahead.
Yes. Thank you. To close today's call, I'd like to underscore how proud I am of the results we delivered in the first half of this year. We are fully focused on execution, advancing our strategy to seize the once-in-a-generation growth opportunity and create value for our customers and investors that we just talked about. We are well positioned for a strong 2026, and I am confident in our ability to earn in the top half of our 5% to 7% EPS growth range beginning in 2028, as we discussed earlier. Our plan is durable well into the future. Thank you for joining us today. Thank you for your questions, and thank you for choosing to invest in Duke Energy. Have a great day.
This concludes today's call. Thank you for attending. You may now disconnect.