Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (May 2018)
58 slides from Nextera Energy's investor presentation, May 2018
Slide 1: May 2018 Investor Presentation
May 2018 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
Slide 3: NextEra Energy is comprised of two strong businesses supported by a common platform
NextEra Energy is comprised of two strong businesses supported by a common platform • ~$77 B market capitalization(1) • ~47 GW in operation(2) • ~$94 B in total assets(3) • The largest electric utility • The world leader in in the United States by electricity generated retail MWh sales from the wind
Slide 4: Built on best-in-class operational excellence and financial strength
Built on a foundation of best-in-class operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2016 Utility & Corporate Benchmarks 2017 NextEra Energy Fuel Mix MWhs(3) Operational Cost(1) SAIDI(2) ($/Retail MWh) (Minutes) Nuclear Wind ~$
Slide 5: 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) $6.70 $6.19 40% 70% $5.71 34% 60% $5.30 60% $4.97 $4.39 $4.57 30% 50% $3.84 $4.05 $4.30 38% $3.49 22% 40% $3.04 20% $2.63 30% 24% 12% 10% 20% 10% 0% 0% '05 '06 '07 '08 '09
Slide 6: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 4/30/2018 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $77,273 NextEra Energy 2 $38,185 2 $64,709 3 $34,476 3 $57,8
Slide 7: Well positioned to continue this track record
We are well positioned to continue this track record Wholesale & Service FPL Coal FPL Territory Retirements Energy Expansion Services FPL FPL Battery FPL T&D FPL New Solar Infrastructure Generation Storage Expect $40 B - $44 B FPL Capital New Wind Generation Asset of capital Recycling Growth Moderni
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. Florida Power & Light • One of the largest U.S. electric utilities • Vertically-integrated, retail rate-regulated • ~5 MM customer accounts • ~26.8 GW in operation • $12 B(1) in operating revenues • ~$51 B in total assets 1) As
Slide 9: Our core focus at FPL has been consistent for many years
Our core focus at FPL has been consistent for many years Areas of Focus • Unyielding commitment to customer value proposition Customer – Low Bills Satisfaction – High reliability – Excellent customer service • Focus on efficiency and best-in- Superior Constructive class cost performance Customer Vir
Slide 10: FPL's value delivery is founded on a low cost position
FPL’s value delivery is founded on a low cost position and best-in-class operations Operational Cost Effectiveness(1) $100.00 Adjusted Regressed Top Quartile Good Top Decile $/ Retail MWh FPL 2016 = $12.91/MWh Log/Log FPL 2017 = $12.44/MWh $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail
Slide 11: FPL 2017 – 2020 Investment Initiatives
FPL projects total capital deployment of $17.5 B to $19.0 B from 2017 to 2020 through smart investments that result in customer savings and enhanced reliability FPL 2017 – 2020 Investment Initiatives Projected Recovery Opportunity Status Investment(1) Mechanism Completed construction on ~600 Solar B
Slide 12: FPL typical residential bills below Florida and National averages
FPL’s strategy continues to result in typical residential bills below both Florida and National averages FPL 1,000-kWh Residential Bill $140 ~$138 $120 ~$119 ~$109 ~$99 ~$101 $100 Good $80 $60 $40 $20 $- FPL FPL (1) FPL FL IOUs(2) National (3) 2006 2018 2021E Average Average FPL expects the typical
Slide 13: Energy Resources' focus is to be the leading North American clean energy company
Energy Resources’ focus is to be the leading North American clean energy company Energy Resources • World leader in electricity generated from the wind and sun • ~20 GW(1) of generation in operation – ~14 GW wind – ~2 GW solar – ~3 GW nuclear – ~1 GW natural gas/oil • ~8 BCF of natural gas pipeline
Slide 14: Energy Resources' renewables development opportunities have never been stronger
Energy Resources’ renewables development opportunities have never been stronger Cost and Technology Improvements Best-in- Development Class Nuclear/Coal- Federal Tax Skills Construction to-Renewables Incentives Expertise Switching ~60 GW U.S. Cost of Customer Renewable Capital and Relationships Dema
Slide 15: 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 16: Energy Resources' competitive advantages position us well
Energy Resources’ competitive advantages position us well for continued success Energy Resources Development Program(1) (Signed Contracts as of April 24, 2018) 2017 – 2018 2017 – 2018 2019 – 2020 2019 – 2020 2017 – 2020 Signed Current Signed Current Current Contracts Expectations Contracts Expectati
Slide 17: Current U.S. renewables development pipeline supports long-term growth
At roughly 28 GW, Energy Resources’ current U.S. renewables development pipeline is capable of supporting long-term growth Renewable Development Longer-Term Pipeline Wind: 450-600 MW Wind: 4,500-4,800 2,200-2,500 MW Solar:1,600-1,700 MW Solar: 600-700 200-300 MW Wind: 300-450 MW Solar: 600-700 MW Wi
Slide 18: Battery efficiency improvements and cost declines 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 19: 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 expects to invest • NEP completed the $
Slide 20: 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-2020(1) Shale (¢/kWh) Gas 3.5 - 5¢ 4 - 5¢ 3 - 4¢ 3 - 4¢ Big Data Renewables /Storage 2 - 2.5¢ Generation Wind Solar Gas Coa
Slide 21: Excess balance sheet capacity for investments, acquisitions, or buybacks
We expect to have excess balance sheet to execute on profitable incremental capital investments, pursue accretive acquisition opportunities, or buy back shares NextEra Energy's Balance Sheet Strength • We remain committed to maintaining one of the strongest balance sheets in the industry • Recognizi
Slide 22: Adjusted EPS expected to grow at a 6% – 8% CAGR through 2021
NextEra Energy expects to grow adjusted EPS at a 6% – 8% CAGR through 2021 off its 2018 midpoint of $7.70 per share NextEra Energy’s Adjusted Earnings Per Share Expectations $9.20 - $8.55 - $9.75 $8.00 - $9.05 $7.45 - $8.50 $7.95 $6.70 2017 2018E 2019E 2020E 2021E Expectation for 2018 is to achieve
Slide 23: Dividend policy extended through at least 2020
NextEra Energy announced extension of dividend policy through at least 2020 NextEra Energy Dividend Expectations Dividend Per Share Growth Dividend Policy • Expected growth in DPS of $5.50 - $5.80 12% to 14% per year through at least 2020 • Reflects continued strength $3.93 of earnings and operating
Slide 24: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 25: NextEra Energy Partners is a diversified clean energy growth company
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 • ~3,700 MW of renewables – ~3,100 MW wind – ~600 MW so
Slide 26: Since the IPO, NEP has grown distributions by ~124%
Since the IPO, NEP has grown distributions by ~124% and delivered total unitholder return of 90% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices $1.68 100% 90% 90% 80% 70% 60% 50% 49% 40% 34% 30% $0.75 20% 10% 0% Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Slide 27: 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 ~3.7 GW Rating(4) Year-end 2017 18-Yr A3 Renewables >90% Ba1/BB/BB+ Remaining Counterparty Capacity of Project Debt ~1.2x & Tax
Slide 28: NEP invests 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: Multiple growth opportunities provide visibility to future growth
Acquisitions from Energy Resources, organic growth and third party M&A all provide NEP with clear visibility to future growth Growth Opportunities Potential Acquisition of Potential Organic Clean Energy Potential for 3rd Prospects for Assets at Energy Party Texas Pipelines Resources, Acquisitions an
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: High-Yield Term Loan B Debt Revolving Convertible Credit Facility Moody’s S&P Fitch Preferred Convertible Preferred Ba1 BB BB+
Slide 31: NEP long-term outlook for distribution growth through 2023
We have extended NEP’s long-term outlook for distribution growth through 2023 NextEra Energy Partners Financial Expectations Annualized LP Distributions(1) Adjusted EBITDA and CAFD(3) Annual 12% - 15% $1,000–$1,150 MM Growth(2) $1.81-$1.86 $1.62 $360–$400 MM Q4 2017 Q4 2018E Q4 2023E 12/31/2018 12/3
Slide 32: NEP offers a superior value proposition
We believe NEP offers a superior value proposition and is better positioned than ever to deliver upon its long-term expectations Investor Total Return Potential • Opportunity to earn a total return of ~4% 16% - 19% roughly 16% - 19% per year through at least 2023 12% - 15% • Diversified portfolio wi
Slide 33: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 33
Slide 34: NextEra Energy
NExTera’ 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 2017(1) 2018(2) FFO/Debt 23%-35% 23% 26% / 29% 28% Debt/EBITDA 2.5x-3.5x 3.0x 3.0x Baa Downgrade Actual Target Moody’s Range Threshold 2017 2018(2) CFO Pre-WC/Debt 13%-22% 20% 22% 23% CFO-Di
Slide 36: Contracted Renewables Development Program
Contracted Renewables 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: 199 201
Slide 37: 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 Solar Date Deadline PTC Date ITC During 2016
Slide 38: Tax reform provides immediate benefit to FPL customers and shareholders
Tax reform provides immediate benefit to FPL customers and is accretive to NextEra Energy shareholders Tax Reform Impacts(1) • Tax reform provides an unprecedented opportunity to benefit FPL customers – Utilized available reserve amortization to offset nearly all of ~$1.3 B expensing of Hurricane Ir
Slide 39: NEP no longer consolidated by NextEra Energy
Due to the enhanced governance rights for LP unitholders, effective January 2018 NEP is no longer consolidated by NextEra Energy Practical Summary of Deconsolidation Accounting GAAP Adjusted Earnings • NEP’s balance sheet removed • No impact to adjusted earnings Equity from NEE’s and replaced with M
Slide 40: Adjusted earnings not materially impacted by NEP deconsolidation
NextEra Energy’s adjusted earnings are not materially impacted by NEP deconsolidation NextEra Energy’s Adjusted Earnings NEP Deconsolidation Impact - Q1 2018 ($ MM) With NEP Consolidated With NEP Deconsolidated Net income attributable to NEE $1,445 Net income attributable to NEE(1) $4,428 Other Adju
Slide 41: New accounting standards and tax reform impacts
In January 2018, NextEra Energy adopted new accounting standards and recorded tax reform-related impacts to tax equity arrangements, which impacts adjusted earnings Practical Summary of New Accounting Standards and Tax Reform Impacts GAAP Adjusted Earnings • Historically unrealized gains were • Unre
Slide 42: Balance Sheet Impacts due to Accounting Changes and Deconsolidation
NEE’s Balance Sheet Impacts due to Accounting Changes and Deconsolidation ($ MM) New Tax Reform Accounting NEP Impact on Tax As Reported Standards Deconsolidation Equity Recast 12/31/2017 1/1/2018 1/1/2018 1/1/2018 1/1/2018 Assets Total PPE 72,416 (96) (6,174) 66,146 (9) Investment in NEP(1) - 4,433
Slide 43: Adjusted earnings now captures NEP investment gains and tax equity impacts
NextEra Energy’s adjusted earnings now captures NEP investment gains related to deconsolidation and tax reform related impacts on tax equity NextEra Energy’s Adjusted Earnings - Q1 2018(1) ($ MM) Net income attributable to NEE(2) $4,428 Other Adjustments (NQH, etc.) (66) NEP Investment gains impact(
Slide 44: Reconciliation of Adjusted Earnings to GAAP Net Income
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2018) Florida Pow er Energy Corporate & NextEra Energy, (m illions, except per share am ounts) & Light Resources Other Inc. Net Incom e (Loss) Attributable to NextEra Energy, Inc
Slide 45: Reconciliation of EPS to Adjusted EPS
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 1) Net of approximately $0.08 of income tax benefit at FPL 45
Slide 46: Definitional information
Definitional information NextEra Energy, Inc. Adjusted Earnings Expectations This presentation refers to adjusted earnings per share expectations. Adjusted earnings expectations exclude the effect of non- qualifying hedges, the transitional impacts of tax reform, NEP investment gains, as well as unr
Slide 47: 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 48: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historica
Slide 49: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 50: NEP's portfolio of ~3.7 GW of renewables plus seven gas pipelines
NEP’s portfolio is comprised of ~3.7 GW of renewable assets plus seven natural gas pipelines with an ~18 year weighted average remaining contract life Portfolio Overview(1) Project COD Location Net MW Technology Counterparty Credit PPA Life Ashtabula III Dec-10 ND 62 Wind A3 21 Baldwin Dec-10 ND 102
Slide 51: NEP's tax shield and PAYGO 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 52: NEP's holdco leverage target consistent with credit ratings
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 (1) (4) S&P Range 2017 YE 2018(5) Holdco Debt/EBITDA 4.0x - 5.0x 3.8x 4.0x - 5.0x Ba1 Actual Target (2) (4) (5) Moody's Range 2017
Slide 53: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,100-$1,250 ($20-$30) ($75-$85) $1,000-$1,150 ($240-$320) ($330-$410) ($30-$35) ($5-$15) $360-$400 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service (2
Slide 54: 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 55: 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 56: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) A change in the jurisdictional characterization of some of the Texas pipeline entities' assets, or a change in law or regulatory policy, could result in increased regulation of these assets, which could have a material adve
Slide 57: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's business; NEP may not be able to access sources of capital on commercially reasonable terms, which wou
Slide 58: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units and preferred units currently cannot remove NEP GP without NEE’s consent; NEE’s interest in NEP GP and the control of NEP GP may be transferred to a third party without unitholder consent; The