Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (May 2019)
59 slides from Nextera Energy's investor presentation, May 2019
Slide 1: May 2019 Investor Presentation
May 2019 Investor Presentation
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results This presentation includes forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from such forward-looking statements. The factors that could cause actual results to d
Slide 3: NextEra Energy is comprised of strong businesses supported by a common platform
NextEra Energy is comprised of strong businesses supported by a common platform • ~$92 B market capitalization(1) • ~51 GW in operation(2) • ~$109 B in total assets(3) • The largest electric utility in the United States by retail MWh sales • Provides electric service • The world leader in to over 46
Slide 4: NextEra Energy delivered strong first quarter results
NextEra Energy delivered strong first quarter results First Quarter 2019 Highlights • NEE grew adjusted EPS by ~12%(1) year-over-year • FPL: – Regulatory capital employed growth of ~8% versus prior-year comparable quarter – ~1,750 MW Okeechobee Clean Energy Center completed on budget and ahead of sc
Slide 5: Our long-term success is the result of a balanced approach to our business practices
Our long-term success is the result of a balanced approach to our business practices, our people, our communities and the environment Creating a Sustainable Energy Future for America Investing in our Team Respecting the Environment & Sustaining Communities(2) 2,500 CO2 Emissions Rate(1) 2,000 1.1 MM
Slide 6: We have a long-term track record of delivering value to shareholders
We have a long-term track record of delivering value to shareholders Adjusted Earnings Per Share(1) Total Shareholder Return(2) $7.70 $6.70 20% 90% 82% $6.18 14% 80% $5.71 $5.30 70% $4.97 $4.30 $4.39 $4.57 10% 60% $3.84 $4.05 50% $3.49 4% 37% $3.04 40% $2.63 30% 0% 30% 20% -4% 10% -10% 0% One Year T
Slide 7: Our growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 4/29/2019 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $91,845 NextEra Energy 2 $38,185 2 $65,183 3 $34,476 3 $63,0
Slide 8: Florida Power & Light is one of the best utility franchises in the U.S.
Florida Power & Light is one of the best utility franchises in the U.S. and we recently added Gulf Power to the portfolio Florida Regulated Utilities • FPL – 5+ MM customer accounts – ~27 GW in operation – ~$12 B in operating revenues(1) – ~$54 B in total assets • Gulf Power – ~0.5 MM customer accou
Slide 9: We expect to execute the same long-term strategy at Gulf Power
We expect to execute the same long-term strategy at Gulf Power that has been our core focus at FPL for many years Virtuous Circle • Unyielding commitment to customer value proposition Customer – Low bills Satisfaction – High reliability – Excellent customer service Superior • Focus on efficiency and
Slide 10: Our focus is on providing customers low bills, high reliability and outstanding service
Our focus is on providing customers low bills, high reliability and outstanding customer service Areas of Focus 1,000-kWh Residential Bill Service Reliability (“SAIDI”)(4) $160 $140 ~$139 ~$129 ~101 minutes $120 ~$120 ~93 minutes ~$101 $100 $80 ~55 minutes Good $60 $40 $20 $- FPL Gulf Power FL IOUs
Slide 11: Energy Resources is the leading North American clean energy company
Energy Resources is the leading North American clean energy company Energy Resources • World leader in electricity generated from the wind and sun • ~22 GW(1) of generation in operation – ~15 GW wind – ~2 GW solar Wind Natural Gas Solar Nuclear – ~3 GW nuclear Storage Other – ~2 GW natural gas/oil P
Slide 12: Wind and solar expected to be competitive into the next decade
With continued technology improvements and cost declines, wind and solar are expected to be competitive into the next decade Wind and Solar Technology Levelized Cost of Levelized Cost of Electricity from Wind Electricity from Solar (Including Production Tax Credits) (Including Investment Tax Credits
Slide 13: Battery efficiency improvements and cost declines expected to expand the storage market
Battery efficiency improvements and cost declines are expected to expand the storage market and enable even greater renewables expansion Storage Technology Lithium-ion 4-Hour Battery Pack Cost(1) Battery Storage Adder(2) $/kWh $/MWh $1,200 $80 $71-$81 $1,000 $70 $1,000 $60 $800 $45-$55 $50 $642 $38-
Slide 14: Energy Resources' competitive advantages position us well
Energy Resources’ competitive advantages position us well for continued renewables development success Energy Resources – Key Competitive Advantages 2018 Top 10 U.S. Capital Investors(1) Wind O&M(2) $/MWh $20 ~$19 ~$19 ~$17 ~25% Reduction $15 ~$13 ~$12 $B ~$11 ~$10 $10 ~$9 ~$9 ~$9 $5 $0 A B C D NEE
Slide 15: Energy Resources continues to capitalize on the best renewables development period
Energy Resources continues to capitalize on the best renewables development period in our history Energy Resources Development Program(1) (Signed contracts as of April 23, 2019) 2019 – 2020 2017 – 2020 2017 – 2018 2017 – 2020 Signed Current In Service Total Contracts Expectations U.S. Wind 1,757 4,2
Slide 16: Energy Resources backlog of future renewables projects has never been stronger
Energy Resources backlog of future renewables projects has never been stronger Energy Resources Renewables Backlog(1) (MW) ~9,800 ~8,900 ~5,000 ~3,700 ~2,900 ~2,400 ~2,100 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q1 2019 Wind Solar Repowering Energy Storage 1) Energy Resources reported backlo
Slide 17: Well positioned for potentially disruptive industry changes
We are well positioned to capitalize on and respond to potentially disruptive changes to our industry in the next decade Disruptive Industry Changes Potential Cost per kWh Post-2023(1) (¢/kWh) Shale 3 - 4¢ w/ 4 - 5¢ Gas storage 3.5 - 5¢ 2 - 3¢ w/ adder 3 - 4¢ storage Renewables adder Big Data /Stora
Slide 18: Expansion into the natural gas pipeline business
We have leveraged our skills and capabilities to expand into the natural gas pipeline business Natural Gas Pipeline Assets Sabal Trail and Florida Mountain Texas Southeast Connection (FSC) Valley Pipeline (MVP) Pipelines • ~$1.5 B investment in Sabal • NextEra is a 31% owner of • NEP completed the $
Slide 19: NextEra Energy – Strong Credit Quality
NextEra Energy continued its focus on growing regulated and long-term contracted businesses during 2018 NextEra Energy – Strong Credit Quality • We remain committed to maintaining one of the strongest balance sheets in the industry • Rating agencies recognized continued improvement in NextEra Energy
Slide 20: We expect to grow adjusted EPS at a 6% - 8% CAGR
We expect to grow adjusted EPS at a 6% - 8% CAGR through 2021, plus accretion from the Florida acquisitions in 2020 and 2021 NextEra Energy’s Adjusted Earnings Per Share Expectations(1) $9.40 - • The Florida acquisitions are $8.70 - $9.95 expected to be $0.15 and $0.20 $8.00 - $9.20 accretive in 202
Slide 21: NextEra Energy Investment Proposition
NextEra Energy’s businesses deliver strong earnings, dividend and cash flow growth and a low beta NextEra Energy Investment Proposition Track record of delivering value to shareholders High visibility into earnings growth to support 11% - 12% total return potential Low payout ratio and above a
Slide 22: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 23: NextEra Energy Partners' Portfolio
NextEra Energy Partners is a best-in-class diversified clean energy growth company NextEra Energy Partners’ Portfolio(1) • Stable cash flows supported by: – Long-term contracts with credit- worthy counterparties – Geographic and asset diversity • ~5,330 MW of renewables – ~4,575 MW wind – ~750 MW so
Slide 24: Since the IPO, NEP has grown distributions by ~160%
Since the IPO, NEP has grown distributions by ~160% and delivered total unitholder return of 118% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices 140% $1.93 118% 120% 100% 80% 66% 60% 56% 40% 25% $0.75 20% 0% Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q3 2016 Q4 2
Slide 25: NEP's value proposition is built upon four core strengths
NEP’s value proposition is built upon four core strengths NextEra Energy Partners’ Core Strengths High-Quality Portfolio(1) Financial Strength and Flexibility Issuer Credit Diversified ~5.3 GW Rating(3) Year-end 2018 17-Yr Portfolio with Renewables >90% Ba1/BB/BB+ Capacity of Project Debt & ~1.2x Re
Slide 26: Agreement with KKR to invest $900 MM in second convertible equity financing
We announced an agreement with KKR to invest $900 MM in our second convertible equity portfolio financing transaction Convertible Equity Portfolio Financing 2.0(1) 2018 2019 Proceeds $750 MM from BlackRock $900 MM from KKR Less than 1% Annual “Coupon” ~2.5% for three years over a six year period(3)
Slide 27: Acquired assets and four existing NEP projects combined into a new portfolio with KKR
The acquired assets and four existing NEP projects will be combined into a new portfolio with KKR, where existing project debt will be recapitalized Transaction Overview • After closing, NEP to contribute 1,192 MW into a new portfolio Sources – 611 MW of acquired projects KKR investment $900 MM – 58
Slide 28: NEP continues to focus on investing in clean energy assets with stable cash flows
NEP continues to focus on investing in clean energy assets with stable cash flows Asset Suitability Long-Term Contract Clean Energy Technology Creditworthy Counterparty “NEP-Able” Asset Stable Regulatory Environment Limited or Monetized Tax Credits Strong Operations Any clean energy asse
Slide 29: Possible path to growth: acquisitions from Energy Resources
One possible path to continued growth at NEP is acquisitions from Energy Resources Energy Resources’ Renewable Portfolio Since NEP’s IPO(1) 25 ~9 GW ~21 GW 20 ~7 GW ~5 GW 15 GW ~10 GW 10 5 0 Renewables MW Placed in MW Sold to NEP Current Backlog Current Portfolio Portfolio after IPO Service since IP
Slide 30: NEP's credit ratings increase financing flexibility and debt capacity
NEP’s credit ratings increase financing flexibility and debt capacity due to greater market access Corporate Credit Rating and Debt Capacity • NEP corporate credit ratings: Convertible Term Loan B High-Yield Equity Debt Moody’s S&P Fitch Portfolio Convertible Financing Revolving Preferred Credit Ba1
Slide 31: NEP's long-term outlook for distribution growth through 2023
NEP’s long-term outlook for distribution growth through 2023 is best-in-class NextEra Energy Partners Financial Expectations Annualized LP Distributions(1) Adjusted EBITDA and CAFD(3) $1,200 MM- Annual $1,375 MM 12% - 15% Growth(2) $2.14 $485 MM - $1.86 $555 MM $410 MM - $480 MM Q4 2018 Q4 2019E Q4
Slide 32: NEP offers a superior value proposition
We believe NEP offers a superior value proposition and is well positioned to deliver upon its long-term expectations Investor Total Return Potential ~4% 16% - 19% • Opportunity to earn a total return of roughly 16% - 19% per year through at least 2023 12% - 15% • Diversified portfolio with stable ca
Slide 33: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 33
Slide 34: NEXT@ra
NEXT@ra ENERGY &%
Slide 35: NextEra Energy's credit metrics remain on track
NextEra Energy’s credit metrics remain on track Credit Metrics A- Downgrade Actual Target S&P Range Threshold 2018 2019 FFO/Debt 13%-23% 21% 27% >21% Debt/EBITDA 3.5x-4.5x 3.1x <4.5x Baa Downgrade Actual Target Moody’s Range Threshold 2018 2019 CFO Pre-WC/Debt 13%-22% 18% 22% >18% CFO-Div/Debt 9%-17
Slide 36: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2017: 2017: Oliver III ND 99 Whitney Point CA 20 Golden Hills North CA 46 Marshall MN 62 Bluff Point IN 120 Westside CA 20 Cottonwood NE 90 Distributed Generation Various 97 Total 2017 Wind: 355 Total 2017 Solar: 199
Slide 37: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2017: 2019 – 2020: Blue Summit TX 30 0.5 Montauk NY 5 8.0 Total: 30 Wilmot AZ 30 4.0 Rush Springs OK 10 2.0 2018: Minuteman MA 5 2.0 Pinal AZ 10 4.0 Total: 50 Parry ON 2 4.0 Post – 2020: Elmira ON 2 4.0 D
Slide 38: Variability in wind resource over the last 30 years
Over the last 30 years we have experienced both positive and negative variability in wind resource Energy Resources Wind Resource Variability vs. Long-Term Average(1) 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 Long-Term Average Monthly Wind Energy Index 1) Historical values represent wind energy in
Slide 39: U.S. Federal tax incentives for renewables extended into the next decade
U.S. Federal tax incentives for completed renewables projects have been extended into the next decade Extended U.S. Federal Tax Credits Wind Production Solar Investment Tax Credit (PTC) Tax Credit (ITC) Start of Start of Construction COD Wind Construction COD Solar Date Deadline PTC Date Deadline IT
Slide 40: Reconciliation of GAAP Net Income to Adjusted Earnings (Q1 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2019) Florida Pow er Gulf Energy Corporate & NextEra (m illions, except per share am ounts) & Light Pow er Resources Other Energy, Inc. Net Incom e (Loss) Attributable to NextEra
Slide 41: Reconciliation of GAAP Net Income to Adjusted Earnings (Q1 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2018) Florida Power Energy Corporate & (millions, except per share amounts) & Light Resources Other NextEra Energy, Inc. Net Income (Loss) Attributable to NextEra Energy, Inc. $
Slide 42: Reconciliation of EPS to Adjusted EPS
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016(1) 2017(1) 2018 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.34 $ 3.23 $ 3.27 $ 4.07 $ 3.97 $ 4.74 $
Slide 43: Definitional information
Definitional information NextEra Energy, Inc. Adjusted Earnings Expectations This presentation refers to adjusted earnings per share expectations. Adjusted earnings expectations exclude the cumulative effect of adopting new accounting standards, the effects of non-qualifying hedges and unrealized ga
Slide 44: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, bu
Slide 45: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effectiveness of NextEra Energy's risk management tools associated with its hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historical behavior;
Slide 46: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 47: Second Convertible Equity Portfolio Overview
Second Convertible Equity Portfolio Overview(1) Asset MW Technology COD Remaining PPA Term Announced Acquisition Story II 150 Wind 2010 11 Silver State 125 Solar 2016 17 Ashtabula II 120 Wind 2010 21 White Oak 150 Wind 2012 13 Roswell 35 Solar 2016 22 Marshall 31 Solar 2017 23 Total Acquisition 611
Slide 48: Second Convertible Equity Portfolio Financing Summary Terms
Second Convertible Equity Portfolio Financing Summary Terms(1) Key Terms Summary KKR commitment of $900 MM; expected net proceeds prior to offering expenses of approximately $893 MM; NEP to fund the Funding Amount: balance of the $1,020 MM Energy Resources portfolio purchase price and approximately
Slide 49: NEP agreed to purchase a 611 MW portfolio from Energy Resources for $1.02 B
NEP has agreed to purchase a 611 MW portfolio of unlevered renewable projects from Energy Resources for $1.02 B(1) Portfolio Additions Remaining Counterparty Asset MW Technology Counterparty COD PPA Term(2) Credit Rating Story II 150 Wind City of Ames, IA; 2010 11 NR / NR; Google AA+ / Aa2 Silver St
Slide 50: Financing expected to provide a cash flow bridge during PG&E bankruptcy
The second convertible equity portfolio financing transaction is expected to provide a cash flow bridge for LP unitholders while the PG&E bankruptcy process is resolved Cash Flow Uplift from 2.0 Transaction $25 $25-$35 $485 - $555 ($95 - $105) ($8 - $12) ($7 - $9) $97 - $107 $410 - $480 $360 - $400
Slide 51: Low cost of financing allows NEP to retain more cash flow
The low cost of the second convertible equity portfolio financing transaction allows NEP to retain significantly more cash flow relative to alternative financings Net Cash Flow of the Second Transaction vs Equity/Debt 2.0 Transaction 50/50 Equity/Debt(1) $165-$195 ($35-$41) Additional Acquisition ($
Slide 52: NEP's tax shield creates the need for tax equity financing
NEP’s tax shield creates the need to employ tax equity financing for projects that generate a large portion of their economics from tax credits PAYGO Tax Equity Financing • Tax equity financing is used Project Cash Flow Split(1) to monetize tax attributes • Under tax equity, an investor makes an up-
Slide 53: NEP's holdco leverage to project distributions target
NEP’s holdco leverage to project distributions metric target of 4.0x – 5.0x is consistent with its strong mid–to–high BB credit ratings Credit Metrics BB Actual Target S&P(1) Range 2018(4) YE 2019(5) HoldCo Debt/EBITDA 4.0x - 5.0x 3.7x 4.0x - 5.0x Ba1 Actual Target Moody's(2) Range 2018(4) YE 2019(5
Slide 54: NEP - PG&E Related Projects
NEP - PG&E Related Projects 12/31/18 Run 12/31/19 Run 12/31/18 Financing PPA Price Rate CAFD Rate CAFD Financing Maturity (1) Project Customer MW COD Term ($/MWh) ($MM) ($MM) Financing Balance Date (2) Genesis Solar PG&E 250 Mar-14 25 $214 $41 - $45 $41 - $45 Genesis Solar LLC $402 2038 Genesis Sola
Slide 55: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($210-$260) ($430-$510) ($30-$35) ($5-$15) $485-$555 ($95-$105) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Trapped Unava
Slide 56: Definitional information
Definitional information NextEra Energy Partners, LP. Adjusted EBITDA and CAFD Expectations This presentation refers to adjusted EBITDA and CAFD expectations. NEP’s adjusted EBITDA expectations represent projected (a) revenue less (b) fuel expense, less (c) project operating expenses, less (d) corpo
Slide 57: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 58: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP does not own all of the land on which the projects in its portfolio are located and its use and enjoyment of the property may be adversely affected to the extent that there are any lienholders or land rights holders tha
Slide 59: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's financial condition and ability to make distributions to its unitholders, as well as its ability to grow distributions in the future, is highly dependent on NEER’s performance of its obligations to return all or a por