Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (March 2018)
58 slides from Nextera Energy's investor presentation, March 2018
Slide 1: February/March 2018 Investor Presentation
February/March 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 • ~$73 B market capitalization(1) • ~47 GW in operation(2,3) • ~$98 B in total assets(3) • The largest electric utility • The world leader in in the United States by electricity generated retail MWh sales from the wi
Slide 4: Built on operational excellence and financial strength, focused on clean generation
Built on a foundation of best-in-class operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2016 Utility & Corporate Benchmarks 2017 NextEra Energy Fuel Mix MWhs(3) Operational Cost(1) SAIDI(2) ($/Retail MWh) (Minutes) Nuclear Wind ~$
Slide 5: NextEra Energy delivered strong financial results in 2017
NextEra Energy delivered strong financial results in 2017 NextEra Energy 2017 Highlights • NEE achieved 8.2% year-over-year adjusted EPS growth in 2017 • Outstanding execution and customer value proposition at FPL – Regulatory capital employed growth of ~10.3% year-over-year – Excellent progress on
Slide 6: Tax reform provides immediate benefit to FPL customers and is accretive to 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 7: 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) $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% $2.63 30% 24% 12% 10% 20% 10% 0% 0% '05 '06 '07 '08 '09
Slide 8: NextEra Energy has outperformed top ten power companies in adjusted EPS growth
NextEra Energy has outperformed all of the top ten power companies in adjusted EPS growth since 2005 Adjusted EPS CAGR 2005 – 2017 Top 10 Power Companies(1) by Market Cap 10% 8.1% 8% 6% 5.6% Adj. EPS (2) CAGR 4.0% 3.9% (%) 4% 3.5% 2.9% 2.7% 2.5% (2) 2.2% 2% 0% (2%) (1.4%) NEE A B C D E F G H I 1) To
Slide 9: Our growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 2/15/2018 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $72,644 NextEra Energy 2 $38,185 2 $60,799 3 $34,476 3 $55,4
Slide 10: We are 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 11: 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 • ~26.6 GW in operation • $12 B in operating revenues • ~$50 B in total assets Note: Dat
Slide 12: 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 13: FPL's value delivery is founded on a low cost position and best-in-class operations
FPL’s value delivery is founded on a low cost position and best-in-class operations Operational Cost Effectiveness(1) $100.00 Good Adjusted Regressed Top Quartile Top Decile $/ Retail MWh Log/Log FPL 2016 = $12.91/MWh $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh 1) FERC Form 1, 2
Slide 14: FPL projects total capital deployment of $17.5 B to $19.0 B from 2017 to 2020
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 ~300 Solar B
Slide 15: FPL's strategy results in 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 ~$140 ~$122 $120 ~$109 ~$99 ~ $102 $100 Good $80 $60 $40 $20 $- FPL FPL (1) FPL FL IOUs(2) National (3) 2006 2018E 2021E Average Average FPL expects the typica
Slide 16: 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 17: 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 18: 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 19: Energy Resources had a record year for new wind and solar origination
Energy Resources had a record year for new wind and solar origination Energy Resources Development Program(1) (Signed Contracts as of January 26, 2018) 2017 – 2018 2017 – 2018 2019 – 2020 2019 – 2020 2017 – 2020 Signed Current Signed Current Current Contracts Expectations Contracts Expectations Expe
Slide 20: Energy Resources' U.S. renewables development pipeline can support 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 21: Battery 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 22: Energy Resources signed an agreement for a solar and storage facility
Energy Resources recently signed an agreement for a solar and storage facility Tucson Electric Power (TEP): Solar and Storage • 100 MW solar with 30 MW, four $45 hour battery storage system <$15 <$45 • 2019 - 2020 expected commercial operation date $30 • Located 15 miles south of $/MWh <$30 Tucson,
Slide 23: We have expanded 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 24: Well positioned to capitalize on 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 25: Excess balance sheet capacity to buy back shares or pursue investments
We expect to have excess balance sheet capacity to buy back shares, execute on profitable incremental capital investments or pursue accretive acquisition opportunities NEE Balance Sheet Strength • We remain committed to maintaining one of the strongest balance sheets in the industry • Recognizing th
Slide 26: We increased the range of our financial expectations and extended our growth outlook
We increased the range of our financial expectations and extended our long-term growth outlook NextEra Energy’s Adjusted Earnings Per Share Expectations • Expectation for 2018 is to achieve $9.20 - $7.70 midpoint $8.55 - $9.75 $9.05 $7.45 - $8.00 - $8.50 – Represents 8% growth off of 2017 $7.95 plus
Slide 27: NextEra Energy extended dividend policy 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 28: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 29: NextEra Energy Partners continued strong execution against strategic and growth initiatives
NextEra Energy Partners continued its strong execution against its strategic and growth initiatives NextEra Energy Partners 2017 Highlights • Grew distributions per unit by 15% from prior-year comparable period • Achieved full year adjusted EBITDA growth of 16% and CAFD growth of 11% • NEP year-end
Slide 30: NextEra Energy Partners is a best-in-class 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 31: Since the IPO, NEP has grown distributions by ~116%
Since the IPO, NEP has grown distributions by ~116% and delivered total unitholder return of 85% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices $1.62 100% 90% 85% 80% 70% 60% 50% 50% 40% 30% 28% 20% 10% $0.75 0% -10% -20% -30% (26%) (2) NEP S&P 500 S&P 500 YieldCo(3) Utilitie
Slide 32: 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 2017E 18-Yr A3 Renewables >90% Ba1/BB/BB+ Remaining Counterparty Capacity of Project Debt ~1.2x & Ta
Slide 33: NEP focuses 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 34: Acquisitions, organic growth and third party M&A 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 35: 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 36: Federal tax rate reduction changes pre-tax value of NEP's tax credits, no effect on CAFD
The federal income tax rate reduction changes the pre-tax value of NEP’s tax credits, but has no effect on CAFD NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Pre-Tax Reform Post-Tax Reform Adjusted Adjusted EBITDA EBITDA CAFD 12/31/17 Run Rate(2) $875 – $975 MM $830 – $930 MM $310
Slide 37: NEP offers a superior value proposition and is better positioned than ever
We believe NEP offers a superior value proposition and is better positioned than ever to deliver upon its long-term expectations Investor Total Return Potential • Opportunity to earn a total return of ~4% 16% - 19% roughly 16% - 19% per year through at least 2022 12% - 15% • Diversified portfolio wi
Slide 38: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 38
Slide 39: NextEra Energy
NExTera’ ENERGY @
Slide 40: Tax reform resulted in impacts to NextEra Energy's 2017 financial statements
Tax reform resulted in impacts to NextEra Energy’s 2017 financial statements 2017 Tax Reform Impacts(1) ($ in millions) Income Tax Benefit Regulatory (Expense)(2) Liability(3) • FPL Impacts – Revaluation of deferred income tax liabilities $4,465 – After-tax impact of Irma shortfall and other ($50) •
Slide 41: NextEra Energy's credit metrics remain on track
NextEra Energy’s credit metrics remain on track Credit Metrics Actual Actual Target S&P A- Range 2016 2017(1) 2018 FFO/Debt 23%-35% 28% 27% 28% Debt/EBITDA 2.5x-3.5x 3.0x 3.0x 3.0x Actual Actual Target Moody’s Baa Range 2016 2017(1) 2018 CFO Pre-WC/Debt 13%-22% 21% 21% 23% CFO-Div/Debt 9%-17% 16% 16
Slide 42: 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 TOTAL 2017 Wind: 355 Distributed Generation Various 97 Total 2017 Solar: 199 201
Slide 43: Reconciliation of Earnings Per Share to Adjusted Earnings Per Share
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 43
Slide 44: 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 effects of tax reform, net effect of gains related to the investment in
Slide 45: 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 46: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effect of reductions in the liquidity of energy markets on NextEra Energy's ability to manage operational risks; effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading pr
Slide 47: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 48: NEP's portfolio is comprised of ~3.7 GW of renewable assets plus seven natural 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 49: NEP's tax shield creates the need to employ 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 50: NEP's holdco leverage to project distributions target is consistent with BB 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(1) BB Target Target (2) S&P Range YE 2017 YE 2018 Holdco Debt/EBITDA 4.0x - 5.0x 3.0x - 4.0x 4.0x - 5.0x Ba1 Target Target (3) Moody's Range YE 2017
Slide 51: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q4 2017 2017 Net income (loss) $ (56) $ 109 Add back: Depreciation and amortization 57 226 Interest expense 44 199 Income taxes 114 167 Tax credits 70 213 Benefits associated with differential membe
Slide 52: Expected Cash Available for Distribution (Dec 31, 17 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $915-$1,015 ($15-$25) ($60-$70) $830-$930 ($240-$290) ($225-$275) $ MM ($30-$35) ($3-$8) $310-$340 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service (2)
Slide 53: Expected Cash Available for Distribution (Dec 31, 18 Run Rate)
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