John Downey
Charlotte Business Journal
The legacy Piedmont Natural Gas operations were pretty good to Duke Energy in their first full quarter as part of the Charlotte energy giant. They added about $107 million in income to the bottom line and $498 million in top-line revenue.
Combining that with the Duke Energy Ohio’s natural gas operations for the quarter, Duke realized about $133 million in segment income from natural gas utilities and infrastructure in the first quarter of 2017. That added about 14 cents per share to Duke’s earnings in the quarter, the company says.
That compares with $32 million in segment income for those operations a year earlier, when its only gas operations were in Ohio. The Ohio operation did not have a pipeline and infrastructure business like Piedmont’s in 2016.
The results are not directly comparable to Piedmont’s standalone earnings in 2016. Piedmont was on a different fiscal calendar then. The closest equivalent would have been Piedmont’s second quarter for fiscal year 2016, which ran from Feb. 1 to April 30. Duke’s fiscal year is the same as the calendar year, so the first quarter covers Jan. 1 to March 30.
The natural gas earnings, while significant, were less than 20% of Duke’s overall net income of $717 million in the quarter.
Coming quarters
Duke (NYSE:DUK) completed the $4.9 billion deal to buy Piedmont on Oct. 3.
When Duke announced plans for Piedmont purchase in October 2015, it told shareholders the deal would be accretive to earnings in the first full year of operations. The first-quarter earnings certainly support that prediction.
Piedmont’s contribution to Duke will not be so large in every quarter. The natural gas utility part of its business is cyclical, with Piedmont making most of its money, usually, in the winter months of the first quarter and in the fourth quarter. Like most gas utilities, Piedmont routinely loses money in its spring and summer quarters, when revenues drop severely as customers are not buying gas for heating their homes and businesses.
The breakout of earnings from its natural gas divisions was contained in supplemental information Duke published this week in a filing with the Securities and Exchange Commission.
All of Duke’s natural gas operations are under executive vice president Frank Yoho, who was previously the chief commercial officer for Piedmont. The SEC filing breaks out as separate items the contributions that Piedmont’s utility operations in the Carolinas and Tennessee, the pipeline and infrastructure division and the Ohio results make to the natural gas division.
Correction/Clarification
An earlier version of the story said all Duke’s gas operations are now a part of its Piedmont subsidiary. While all gas operations fall under Frank Yoho, the Piedmont subsidiary comprises just the Carolinas and Tennessee utility operations.