Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Debt Investor Presentation (May 2012)
37 slides from Nextera Energy's debt investor presentation, May 7, 2012
Slide 1: Capital Structure Overview and Financing Our Growth
Fixed Income Investor Meeting Capital Structure Overview and Financing Our Growth Paul Cutler Treasurer May 7, 2012
Slide 2: Agenda
Agenda • Capital Structure Review • 2011 Financing Activities • Adjustments to Balance Sheet • 2012 Financing Plan • Strength of Energy Resources Portfolio 2
Slide 3: NextEra Energy raises debt at various levels of the corporate structure
NextEra Energy raises debt at various levels of the corporate structure, each with strong credit ratings NextEra Energy, Inc. “NextEra” Issuer Rating A-/Baa1/A-(1) Market Capitalization $26.9 billion(2) No debt Corporate Guarantee of Debt NextEra Energy Florida Power & Capital Holdings, Light Compan
Slide 4: NextEra Energy has one of the strongest balance sheets in the industry
NextEra Energy has one of the strongest balance sheets in the industry Credit Ratings Utility Credit Ratings(1) NextEra Energy Ratings(2) 30% NextEra Energy 26% S&P Moody's Fitch 25% 24% NextEra Energy 21% Issuer credit rating A- Baa1 A- 20% Outlook Stable Stable Stable Florida Power & Light 15% Fir
Slide 5: Maintaining sufficient liquidity is important to our long-term financial structure
Maintaining sufficient liquidity continues to be an important part of our long-term financial structure Summary of Corporate Credit Facilities • $6.6 billion corporate credit facility – $2.5 billon for FPL – $4.1 billion for Capital Holdings – Final maturity in February 2017(1) Approximately $5 bill
Slide 6: NextEra has received approximately $15.6 billion of credit
NextEra has received approximately $15.6 billion(1) of credit, including commitments and funded transactions Country Breakdown by Funding Norway UK $0.2 billion $1.4 billion Canada Japan $1.5 billion Germany $3.3 billion $1.5 billion France Switzerland $1.3 billion Spain $0.6 billion U.S. $3.1 $2.9
Slide 7: Manageable debt maturity profile matched to asset lives
We have a manageable debt maturity profile and target maturities to match asset lives NextEra Energy Debt Maturity Profile(1) $3.5 FPL $3.0 Capital Holdings Lone Star Transmission $2.5 $2.0 $ Billions $1.5 $1.0 $0.5 $0.0 NextEra‟s outstanding debt has an average life of 21 years 1) Debt as of 3/31/2
Slide 8: Maturity profile and cost of debt compare favorably to peers
NextEra‟s maturity profile and cost of debt compares favorably to industry peers Average Debt Profile with Peer Comparison(1) 7.0% 6.5% 6.0% Average Cost (%) 5.5% FPL(2) 5.0% 4.5% Capital Holdings(3) 4.0% 5 7 9 11 13 15 17 19 21 23 Average Maturity 1) Peer group of power and utility companies provid
Slide 9: Strong business profile and financial position result in an A- rating by S&P
Our strong and balanced business profile and financial position have resulted in an “A-” issuer rating by S&P… NextEra Energy‟s S&P Credit Metric History(1) Debt to Total Capital (year end) 8.0 FFO to Interest Expense (12 months) 60% 7.0 50% 6.0 40% 5.0 30% 4.0 3.0 20% 2.0 10% 1.0 0% 2000 2001 2002
Slide 10: Most non-financial S&P 500 firms and utilities are at BBB+
… while on average, most non-financial S&P 500 firms and utilities are at a „BBB+‟ rating Credit Rating Positioning(1) S&P 500 Issuer Rating Distribution (Non-Financial Companies) Median of Rated 25% S&P 500 Firms NextEra 20% 15.3% 16.3% 14.9% 15% 10.1% 10.8% 10.3% Median of 10% Rated Entities 5.8%
Slide 11: Adjusted payout ratio in line with hybrid average
NextEra‟s adjusted payout ratio is in-line with the hybrid average, but conservative when compared to purely regulated peers Historical Adjusted Dividend Payout Ratio Comparisons(1) Name Type 12/31/2009 12/31/2010 12/31/2011 60% American Electric Power R 55% 56% 59% Industry Average Constellation En
Slide 12: Agenda
Agenda • Capital Structure Review • 2011 Financing Activities • Adjustments to Balance Sheet • 2012 Financing Plan • Strength of Energy Resources Portfolio 12
Slide 13: We employ a diverse set of instruments to fund our growth
We employ a diverse set of instruments to fund our growth Sources of Funding • First mortgage bonds • Securitized storm bonds • Corporate debentures • Commercial paper • Junior subordinated debentures (Hybrids) • Project finance • Differential membership interest (Tax Equity) • Equity units • Common
Slide 14: In 2011, we raised $7.3 billion by accessing a variety of markets
In 2011, we raised $7.3 billion by accessing a variety of markets while maintaining our credit ratings 2011 Financing Activities ($ Millions) Amount Transactions First mortgage bonds $ 850 2 Corporate debt 400 1 Term loans 775 8 Yen regional bank term loans 424 1 Limited recourse project debt 2,810
Slide 15: Two successful first mortgage bond transactions at FPL
In 2011, we closed on two successful first mortgage bond transactions at FPL First Mortgage Bonds • In June, issued $250 million of 30-year 5.125% bonds maturing June 1, 2041 • In December, issued $600 million of 30-year 4.125% bonds maturing February 1, 2042 • Bonds are rated Aa3/A/AA-(1) • At the
Slide 16: Capital Holdings issued $400 million of 10-year debentures
Capital Holdings issued $400 million of 10-year fixed rate debentures at 4.50% in June 2011 Corporate Debt Terms Final Allocation • Due June 1, 2021 5% 16% • Rated Baa1/BBB+/A- (1) 28% • Issued at 148 bps spread 6% over 10-year UST • Nearly 2x oversubscribed 45% • Strong demand from fundamental buye
Slide 17: Capital Holdings closed eight term loan transactions in 2011
Capital Holdings closed on eight term loan transactions during 2011 totaling $775 million(1) Bank Term Loans • Floating rate loans • Offer interest rate flexibility, borrower chooses either 1, 2, 3 or 6 month LIBOR • Tenors ranging from 18-24 months • No prepayment penalties • Favorable spreads rela
Slide 18: Second largest Yen regional bank term loan by a non-Japanese issuer
Last year Capital Holdings issued the 2nd largest Yen regional bank term loan by a non-Japanese issuer with an all-Japanese syndicate 2011 Samurai Loan Market 60,000 50,000 Japanese NextEra Energy Capital Holdings Yen 40,000 Japanese Yen 34 B (000‟s) 30,000 20,000 10,000 0 We successfully refinanced
Slide 19: We raised more than $4 billion in limited-recourse project debt
We raised more than $4 billion in limited-recourse project level debt in seven transactions 2011 Project Financings Spain Solar Limited recourse term facility to be used to fund a 99.8 MW solar project currently under construction in Spain. Won the European Solar CSP Deal of the Year award $1.2 B fr
Slide 20: New equity issued in 2011 through DRIP and stock compensation plans
We also issued new equity in 2011 through a combination of the dividend reinvestment program and stock based compensation plans Common Equity • Cash received from stock option exercises was approximately $31 million • Approximately $16.5 million was issued through the dividend reinvestment plan • We
Slide 21: Energy Resources completed three tax equity transactions in 2011
Energy Resources completed three tax equity transactions in 2011 to efficiently transfer tax benefits to third party investors Tax Equity White Oak • 150 MW wind facility in Illinois $177 MM • Utilized the C-ITC structure Penta Wind • 483 MW among 5 facilities in 5 states $118 MM • Utilized the PAYG
Slide 22: Agenda
Agenda • Capital Structure Review • 2011 Financing Activities • Adjustments to Balance Sheet • 2012 Financing Plan • Strength of Energy Resources Portfolio 22
Slide 23: On a GAAP basis, debt to total capital is 61%
On a GAAP basis, NextEra‟s debt to total capital is 61% NextEra Energy Capitalization as of 3/31/12 $ Millions GAAP Junior Subordinated Debentures (Hybrids) $2,753 Equity Unit related Debentures 753 Project Debt 5,195 Storm Securitization Debt 461 Lone Star Transmission 166 Pipeline Funding 500 Wast
Slide 24: Equity units allow adjusted balance sheet strength
The equity-like characteristics of equity units allow NextEra on an adjusted basis to maintain balance sheet strength NextEra Energy Capitalization as of 3/31/12 $ Millions Adjustments Equity GAAP Units (1) Junior Subordinated Debentures (Hybrids) $2,753 Equity Unit related Debentures 753 Project De
Slide 25: Rating agencies give equity credit for hybrid securities
S&P and Fitch give 50% equity credit for Hybrid securities while Moody‟s gives 25% NextEra Energy Capitalization as of 3/31/12 $ Millions Adjustments Equity GAAP Units (1) Hybrids (2) Junior Subordinated Debentures (Hybrids) $2,753 (1,377) Equity Unit related Debentures 753 Project Debt 5,195 Storm
Slide 26: Storm bonds are non-recourse to FPL
Storm bonds are non-recourse to FPL and secured by a legislatively approved bill surcharge NextEra Energy Capitalization as of 3/31/12 $ Millions Adjustments Equity Storm GAAP Units (1) Hybrids (2) Bonds (3) Junior Subordinated Debentures (Hybrids) $2,753 (1,377) Equity Unit related Debentures 753 P
Slide 27: Limited recourse nature of project debt protects bondholders and shareholders
The limited recourse nature of project debt protects both corporate bondholders and shareholders from project level under performance NextEra Energy Capitalization as of 3/31/12 $ Millions Adjustments Equity Storm Project GAAP Units (1) Hybrids (2) Bonds (3) Debt (3) Junior Subordinated Debentures (
Slide 28: On an adjusted basis, debt to total capital is 48%
On an adjusted basis, NextEra‟s debt to total capital is 48% NextEra Energy Capitalization as of 3/31/12 $ Millions Adjustments Equity Storm Project GAAP Units (1) Hybrids (2) Bonds (3) Debt (3) Adjusted Junior Subordinated Debentures (Hybrids) $2,753 (1,377) $1,377 Equity Unit related Debentures 75
Slide 29: Agenda
Agenda • Capital Structure Review • 2011 Financing Activities • Adjustments to Balance Sheet • 2012 Financing Plan • Strength of Energy Resources Portfolio 29
Slide 30: Projected capital spend expected to decline significantly
Projected capital spend is expected to significantly decline over the next few years as a result of the PTC expiration and completion of the modernization and nuclear uprate projects at FPL Projected Capital Expenditure Spend(1) $10,000 $9,000 $8,000 $7,000 $ Millions $6,000 $5,000 $4,000 $3,000 $2,
Slide 31: Cash from Operations expected to exceed Cash to Investing after 2012
Looking forward, absent significant new investment, we expect “Cash from Operations” to exceed “Cash to Investing” after 2012 Summary of NextEra Energy Cash Flow $8,000 $7,000 $6,000 $5,000 $ Millions $4,000 $3,000 $2,000 $1,000 $0 2009A 2010A 2011A 2012P 2013P 2014P Cash Flow from Operations Cash F
Slide 32: We expect to access diverse financing instruments in 2012
We expect to access a diverse array of financing instruments in 2012 Potential 2012 Sources of Financing $ Millions First mortgage bonds $500 - $1,000 Corporate debt and bank term loans $500 - $1,000 Hybrids $500 - $1,000 Project debt and tax equity $1,500 - $2,500 Equity units $500 - $1,000 Common
Slide 33: Agenda
Agenda • Capital Structure Review • 2011 Financing Activities • Adjustments to Balance Sheet • 2012 Financing Plan • Strength of Energy Resources Portfolio 33
Slide 34: Energy Resources produced $1.4 billion of distributable cash in 2011
Focusing on the Energy Resources‟ portfolio specifically, we produced $1.4 billion of distributable cash in 2011 2011 Distributable Cash(1) $2,250 $326 $2,000 $1,958 $662 $1,750 $1,500 $259 $1,363 $1,036 $ Millions $1,250 $1,000 $803 $750 $500 $922 $250 $560 $0 Cash (2) Tax Equity Debt Maintenance D
Slide 35: Capital Holdings receives sufficient inflows from Energy Resources to meet debt service
Capital Holdings receives sufficient inflows from the asset portfolio at Energy Resources to meet its debt service requirements Distributable Cash/Capital Distributable Cash/Capital Holdings Year End Debt(1) Holdings Interest Expense(2) 4.5x 20% 4.0x 3.5x 15% 3.0x 2.5x 10% 2.0x 1.5x 5% 1.0x 0.5x 0%
Slide 36: Remaining agenda for the afternoon
We have a full afternoon of discussions planned on specific topics that we feel are important to our fixed income investors Remaining Agenda • Break • Dan Lotano – Project Finance and Tax Equity • Amy Black – Equity Units, DOE Loan Guarantee and Credit Diversification • Aldo Portales – Hybrid Securi
Slide 37: NextEra Energy
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