Duke Energy Q2 Adj Profit Misses View, But Revenues Top; Backs 2013 Outlook

(RTTNews) - Electric utility Duke Energy Corp. (DUK) reported Wednesday a profit for the second quarter that declined from last year, primarily hurt by higher charges and interest expenses. Stripping down the charges, adjusted earnings per share missed analysts' expectations, while quarterly revenues missed their estimates. The company also reaffirmed its earnings guidance for the full-year 2013.

The company in mid-June promoted CFO Lynn Good to take over as the new President and CEO to succeed Jim Rogers, who served at the positions since 2006. Rogers will continue to serve as chairman of the company's board until his retirement on December 31, 2013.

The company on Tuesday also named Steve Young as its executive vice president and CFO to replace Good. Young has served as vice president, controller and chief accounting officer since 2005. Young, 55, joined Duke Power in 1980.

"After one year, we have had tremendous success coming together as one, stronger company. We're delivering on our promises to customers, shareholders and our communities. We continue making progress with our near-term priorities, positioning Duke Energy for long-term financial and operational success," Good said in a statement.

Charlotte, North Carolina-based Duke Energy reported net income of $339 million or $0.48 per share for the second quarter, lower than $444 million or $0.99 per share in the prior-year quarter.

Results for the latest quarter primarily include $0.26 per share of charges related to a write-off of investment balances in Crystal River 3. Excluding items, adjusted net income for the quarter was $0.87 per share, compared to last year's $1.02 per share.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.94 per share for the quarter. Analysts estimates typically exclude special items.

Total operating revenues for the quarter surged to $5.88 billion from $3.58 billion in the same quarter last year, and topped seven Wall Street analysts' consensus estimate of $5.73 billion.

Regulated electric revenues nearly doubled to $4.83 billion from $2.63 billion, non-regulated electric, natural gas, and other revenues grew to $951 million from $868 million and regulated natural gas revenues were $94 million, up from $81 million in the prior-year quarter.

The company noted that U.S. franchised electric & gas, its largest business unit, overcame milder weather to post favorable results in the second quarter, while both the commercial power and international energy business units reported lower quarterly results.

U.S. Franchised Electric and Gas segment reported adjusted segment income of $590 million, up from $337 million, while international Energy adjusted segment income declined to $87 million from $105 million, and commercial power segment recorded adjusted segment loss of $3 million, compared to adjusted segment income of $32 million in the year-ago quarter.

Operating income for the quarter was $821 million, up from $786 million last year, and total operating expenses nearly doubled to $5.06 billion from last year's $2.80 billion. Interest expense grew to $381 million from $232 million a year ago.

Looking ahead to fiscal 2013, Duke Energy reaffirmed its outlook for adjusted earnings in a range of $4.20 to $4.45 per share. Street is current;y looking for full-year 2013 earnings of $4.33 per share.

The company noted that it expects stronger adjusted earnings in the second half of the year as it implements revised customer rates and continues to achieve efficiencies from the merger transaction.

"We are keenly focused on achieving our financial objectives, supported by realizing constructive regulatory outcomes, maximizing cost efficiencies from our merger, and optimizing the performance in all of our operations," Good added.

In Wednesday's regular trading session, DUK is currently trading at $70.83, down $0.29 or 0.41% on a volume of 0.23 million shares.