Duke Energy Corporation (DUK) Earnings

Management highlights

- Strategic and Regulatory Progress: • Reached a comprehensive settlement with stakeholders in the North Carolina DEC rate case, including a 9.8% allowed ROE, 53% equity capital structure, continuation of the multi-year rate plan framework, and an earnings sharing mechanism allowing up to 10.3% ROE. The company is pursuing a similar framework for the upcoming DEP rate case, with expected commission orders for both cases by mid-November 2026. • Four of the company's service states ranked in CNBC's top 10 for business, with North Carolina named the top U.S. economy for growth, driving strong customer load demand. • The company is executing the industry's largest regulated capital plan, deploying more than $1 billion per month in infrastructure investments. - Customer Cost Management: • Implemented an accelerated tax credit recognition strategy for a Florida battery project that will offset a 2027 base rate increase for customers, and applied for multi-billion dollar U.S. Department of Energy loans to reduce interest costs for eligible projects. • Launched the Customer Protection Plus Commitment, which ensures large energy users cover the full cost of serving their facilities and is projected to deliver billions of dollars in long-term benefits for existing customers. The company ranks third among electric industry peers for low non-generation O&M per customer. - Generation Fleet Development: • On track to add 15 gigawatts of new capacity by 2031, aligned with updated 10-year planning in Florida. Hearings for the 2025 Carolinas Resource Plan are concluded, with the company's load forecast now upgraded to the high-load scenario that confirms all near-term resources are needed, and a commission order expected by end-2026. • The company is extending the operating life of its existing large regulated nuclear fleet, with two subsequent license renewals (SLR) approved by the NRC, and an SLR application for the Brunswick Nuclear Plant planned by end-2026. It is evaluating new nuclear development but requires third-party financial risk protections for customers and investors before moving forward. • Increased the contracted number of gas turbines from G.Vernova to 26 for new dispatchable capacity build, with the first turbine delivered in July 2026. Currently ~5 gigawatts of gas capacity is under construction, with an additional 2.5 gigawatts in advanced development, with structured EPC contracts and real-time milestone monitoring to ensure on-time, on-budget delivery. - Commercial and Economic Development: • Has secured 7.8 gigawatts of electric service agreements (ESAs) with data center customers to date, with the full 15.4 gigawatt late-stage pipeline expected to be converted to signed ESAs by H1 2027. Signed contracts have already increased the Carolinas load forecast to the high case. • Beyond data centers, the company secured $5 billion of economic development investment across the service territory in H1 2026, supporting over 9,000 jobs. If all projected ESAs are signed, there is $5 to $10 billion of upside to the current five-year capital plan for additional generation and transmission capacity, concentrated in Indiana and Florida. Customers have started vertical construction on their facilities, with energy production expected to start in H2 2027/2028 and ramp to full contracted load by the early 2030s. All ESAs include minimum take provisions to protect revenue projections and existing customers. - Balance Sheet and Capital Return: • On track to meet the 2026 FFO-to-debt target of 14.5%, with a long-term target of 15% as additional proceeds from the DEF minority interest investment are received. Has priced $600 million of equity under the ATM program in 2026, locking in attractive pricing to de-risk future equity needs. • Announced a 2% quarterly dividend increase in July 2026, marking over 20 consecutive years of annual dividend growth.

Guidance

- The company reaffirms its 2026 full-year adjusted EPS guidance range of $6.55 to $6.80, and states it remains firmly on track to achieve results within this range. - The company reaffirms its long-term 5% to 7% annual EPS growth target through 2030, with increased confidence that results will land in the top half of this range starting in 2028, when load growth from signed ESAs begins to accelerate. - Management noted it typically updates long-term growth guidance in the fourth quarter, and will only update it out-of-cycle if there is a material change. The full 15.4 gigawatt pipeline is expected to be converted to signed ESAs by the first half of 2027.

Segment performance

Duke Energy reported Q2 2026 reported earnings per share (EPS) of $1.38 and adjusted EPS of $1.43, compared to $1.25 for both metrics in Q2 2025. 1. Electric Utilities and Infrastructure: Adjusted EPS was up 15 cents year-over-year, driven by customer growth and new infrastructure investments, partially offset by higher depreciation from the growing asset base and higher interest expense. 2. Gas Utilities and Infrastructure: Performance was largely flat year-over-year, which was consistent with expectations for a shoulder quarter. 3. Other Segment: Adjusted EPS was up 3 cents year-over-year, primarily due to lower holding company financing costs from proceeds of the Tennessee and Florida transaction and higher market returns. Favorable weather (colder Q1 2026 followed by a hotter-than-normal Q2 2026) also contributed positively to year-to-date results.

Risks & headwinds

- New nuclear development carries inherent first-of-a-kind construction and supply chain risks, and the company will not move forward with any new nuclear project until sufficient financial risk protections for customers and investors are secured. - Large ESA negotiations for data center and other large load projects are complex and can take longer than expected to complete. - The company faces heightened regulatory and political focus on energy affordability in Indiana, which adds uncertainty to upcoming rate and planning cases. - The scaled multi-gigawatt generation build cycle carries potential supply chain, labor, and construction cost/schedule risks that the company is actively monitoring and managing through pre-planning and standardized contracts.

Analyst Q&A

• Q: With up to $10 billion of potential incremental CapEx from the large load pipeline, could the company upgrade its long-term EPS CAGR range out-of-cycle ahead of the typical Q4 update, similar to peer companies? /

  A: Management maintains high confidence in the existing 5% to 7% CAGR range, with results on track to hit the top half of the range starting in 2028 as large loads ramp. Negotiations for the 15 gigawatt pipeline are progressing but are complex and sometimes take longer than expected. The company remains on track to convert all pipeline to signed ESAs by H1 2027, and will only update guidance if there is a material change, with updates typically done in Q4.

• Q: For the $5 to $10 billion of incremental CapEx upside for large load projects, how much of this will fall in the current five-year plan versus the mid-2030s? /

  A: The entire $5 to $10 billion upside is contemplated as incremental capital within the remaining four years of the current five-year plan. This incremental spend will be triggered once ESAs are signed and the required generation and transmission capacity for the contracts is finalized, ahead of the next five-year plan rollout in February.

• Q: With a record generation build cycle underway industry-wide, have you encountered construction bottlenecks, and how are you mitigating delivery risks? /

  A: Large-scale construction is a core competency for Duke Energy, which has built generation facilities continuously for decades. The company uses standardized site designs, programmatic EPC contracts that allow crews to move seamlessly between projects, and AI monitoring tools to track progress. This structure creates cost and schedule synergies, and management is confident it can deliver projects on time and on budget.

• Q: What is the status of new nuclear development, including the choice between large AP1000 reactors and small modular reactors (SMRs), and what is the timeline for a decision? /

  A: The company is keeping both options open: it holds an early site permit for SMRs and is monitoring progress of ongoing SMR projects, and also holds a COLA license for two AP1000 reactors at its Lee facility. AP1000 is currently the leading option due to the scale of expected generation demand. No decision timeline has been set, as the company will only move forward once sufficient financial risk protections for customers and investors are secured, which are still under discussion with federal and state officials.