Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — FY2018 Earnings Presentation
50 slides from Nextera Energy's earnings presentation, Jan 25, 2019
Slide 1: Earnings Conference Call Fourth Quarter and Full Year 2018
Earnings Conference Call Fourth Quarter and Full Year 2018 January 25, 2019
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 delivered solid execution and strong financial results in 2018
NextEra Energy delivered solid execution on major initiatives and strong financial results in 2018 NextEra Energy 2018 Highlights • Achieved adjusted EPS target of $7.70, up ~15% from prior year • Outstanding execution and customer value proposition at FPL – Regulatory capital employed growth of ~12
Slide 4: NextEra Energy – Strong Credit Quality
NextEra Energy continued its focus on growing regulated and long-term contracted businesses during 2018 NextEra Energy – Strong Credit Quality • In addition to the Florida acquisitions, announced agreement to acquire FERC regulated Trans Bay Cable – 53-mile, high-voltage DC underwater transmission c
Slide 5: FPL's full-year contribution to adjusted EPS increased 46 cents
FPL’s full-year contribution to adjusted EPS increased 46 cents Florida Power & Light Results(1) Fourth Quarter Full Year Net Income EPS Net Income EPS ($ MM) ($ MM) $407 $0.85 $2,171 $4.55 GAAP: $3.98 $344 $0.73 $1,880 2017 2018 2017 2018 2017 2018 2017 2018 Adjusted: $2,171 $4.55 $394 $407 $0.84 $
Slide 6: Continued investment was the primary driver of growth at FPL
Continued investment in the business was the primary driver of growth at FPL Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(2) (Excluding Accumulated Deferred Income Taxes) Fourth Full $B Quarter Year 35.0 $33.6 FPL – 2017 Adjusted EPS(1) $0.84 $4.09 $29.9 30.0
Slide 7: Florida's economy remains strong
Florida’s economy remains strong Customer Characteristics & Florida Economy Retail kWh Sales Customer Growth(1,2) (Change vs. prior-year period) (Change vs. prior-year quarter) Fourth Full 100 Quarter Year 80 71 Customer Growth & Mix 0.9% 0.9% # of 60 UKU Impact + Usage Change Due to Weather 0.6% -2
Slide 8: Energy Resources' 2018 adjusted EPS increased 45 cents
Energy Resources’ 2018 adjusted EPS increased 45 cents over the prior year Energy Resources Results(1) Fourth Quarter Full Year Net Income EPS Net Income EPS ($ MM) ($ MM) $1,896 $4,664 $9.75 $4.00 GAAP: $2,964 $6.27 $263 $0.55 2017 2018 2017 2018 2017 2018 2017 2018 $317 $0.66 $1,455 $3.05 Adjusted
Slide 9: Energy Resources' adjusted EPS growth drivers
Energy Resources’ adjusted EPS growth was driven by contributions from existing investments and lower income tax rates Energy Resources Full Year 2018 Adjusted EPS(1) Contribution Drivers $3.50 $0.45 ($0.23) $3.05 $3.00 $0.17 $2.60 ($0.04) $0.10 $2.50 $2.00 ($0.09) Renewables $0.05 Gas pipelines $1.
Slide 10: Energy Resources had a record year of renewables origination
Energy Resources had a record year of renewables origination Energy Resources Development Program(1) • Added ~6,500 MW of renewables projects to backlog • Includes ~1,300 MW of wind repowering, 425 MW of battery storage and 150 MW build-own-transfer project with 10-year O&M agreement • Added ~200 MW
Slide 11: NextEra Energy's adjusted EPS increased ~15% year-over-year
NextEra Energy’s adjusted EPS increased ~15% year-over-year NextEra Energy EPS Summary(1) Fourth Quarter EPS Full Year EPS GAAP 2017 2018 Change GAAP 2017 2018 Change FPL $0.73 $0.85 $0.12 FPL $3.98 $4.55 $0.57 Energy Resources $4.00 $0.55 ($3.45) Energy Resources $6.27 $9.75 $3.48 Corporate and Oth
Slide 12: Adjusted Earnings Per Share Expectations
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 - $9.20 accretive in 202
Slide 13: NEP had a strong year of operational and financial performance in 2018
NEP had a strong year of operational and financial performance in 2018 NextEra Energy Partners 2018 Highlights • Grew distributions per unit by 15% from prior-year comparable period • Delivered full year adjusted EBITDA and CAFD(1) growth of 18% and 36%, respectively • Executed sale of Canadian wind
Slide 14: NextEra Energy Partners – Full Year Drivers
NEP delivered strong full year results driven primarily by contributions from new projects NextEra Energy Partners – Full Year Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $1,000 $400 $168 ($61) $35 ($12) ($20) $30 $0 ($12) $10 $881 $350 $84 ($27) $30 $339 $800 $746 $300 $250 $249 $600 $200 $400 $1
Slide 15: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/18 Run Rate(2) $1,000 – $1,150 MM $360 – $400 MM 12/31/19 Run Rate(3) $1,200 – $1,375 MM $410 – $480 MM Unit Distributions 2019(4) $2.08 - $2.14 annualized rate by year-end 2018 – 2023(5) 12% - 15% average an
Slide 16: Q&A Session
Qé&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 16
Slide 17: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 17
Slide 18: NextEra Energy
NEXT@ra ENERGY &%
Slide 19: 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 20: 2019 Potential Sources of Variability
Potential drivers of variability to consolidated adjusted EPS 2019 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.01 - $0.02 • Timing of investment ± $0.04 - $0.05 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.04 - $0.05 • Wind
Slide 21: Energy Resources' 2018 Adjusted EBITDA by Asset Category
Energy Resources’ 2018 Adjusted EBITDA by Asset Category(1,2) 2018 Expectations 2018 Actual as of Q1 2018(3) EBITDA Primary Driver of Delta NEER Existing Assets Contracted Renewables $2,525 - $2,625 $ 2,496 Lower wind resource than expected Contracted Nuclear $425 - $475 $ 492 Favorable return from
Slide 22: Energy Resources Projected 2019 Portfolio Financial Information
NextEra Energy Resources Projected 2019 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Adjusted credits included in Maintenance Pre-Tax Cash Remaining EBITDA(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Contract Life (8) NEER Exi
Slide 23: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2017 2018 4TH QTR 1ST QTR 2ND QTR 3RD QTR 4TH QTR Location MW Oct Nov Dec QTR YTD MW QTR MW QTR MW QTR MW Oct Nov Dec QTR YTD Midwest 3,189 116% 102% 105% 107% 100% 3,637 101% 3,637 87% 3,637 94% 3,847 90% 83% 92% 88% 93% West 3,302 109% 98% 93% 100% 96%
Slide 24: Wind Production Summary
The percentage of PTCs allocated to tax equity investors has continued to grow Wind Production Summary 2012 2013 2014(2) 2015(2) 2016(2) 2017(2) 2018(2) Effective Capacity (MW)(1) 8,887 10,117 10,374 11,653 12,636 13,986 13,843 Wind Production (TWh) 25.8 29.2 32.0 33.8 38.8 44.2 44.5 Implied Average
Slide 25: 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 26: 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 27: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 9/30/18(2) $499 Amounts Realized During 4th Quarter - Change in Forward Prices (all positions) (139) Primary Drivers: Subtotal – Income Statement (139) Interest Rate Hedges ($469) Other 1 Revenue H
Slide 28: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 4th Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance 1/1/18 Amounts Forward NQH Gain / Balance Description 9/30/18 Adjustments(3) Realized Prices (Loss) Other(4) 12/31/18 Pretax Amounts Gross Natural gas related posit
Slide 29: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) Gain / (Loss)(1) Asset / (Liability) Balance Total Description 12/31/18 2019 2020 2021 2022 2023 - 2047 2019 - 2047 Pretax gross amounts Natural gas related positions $ 653 $ (84) $ (72) $ (80) $ (100) $ (317) $ (653) Gas Infrastructur
Slide 30: Reconciliation of GAAP Net Income to Adjusted Earnings (Q4 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended December 31, 2018) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc.
Slide 31: Reconciliation of GAAP Net Income to Adjusted Earnings (Q4 2017)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended December 31, 2017) Florida Power Energy Corporate & (millions, except per share amounts) & Light Resources Other NextEra Energy, Inc. Net Income (Loss) Attributable to NextEra Energy, Inc.
Slide 32: Reconciliation of GAAP Net Income to Adjusted Earnings (2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Twelve Months Ended December 31, 2018) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc
Slide 33: Reconciliation of GAAP Net Income to Adjusted Earnings (2017)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Twelve Months Ended December 31, 2017) Florida Power Energy Corporate & (millions, except per share amounts) & Light Resources Other NextEra Energy, Inc. Net Income (Loss) Attributable to NextEra Energy, Inc
Slide 34: Reconciliation of GAAP EPS to Adjusted EPS, 2005 to 2018
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. 2005 2018 CAGR Earnings Per Share (assuming dilution) Attributable to NextEra Energy, Inc. $ 2.34 $ 13.88 14.7% Adjustments - pretax: Net losses (gains) associated with non-qualifying hedges 0.47 0.50 Change
Slide 35: 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, effect of non-qualifying hedges, the transitional impa
Slide 36: 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 37: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) risk to NextEra Energy Resources of increased operating costs resulting from unfavorable supply costs necessary to provide NextEra Energy Resources' full energy and capacity requirement services; inability or failure by Nex
Slide 38: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 39: Reconciliation of Net Income to Adjusted EBITDA and CAFD (2018)
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q4 2018 2018 Net income (loss) $ (117) $ 267 Add back: Depreciation and amortization 51 203 Interest expense 155 248 Income taxes (7) 6 Tax credits 68 271 Gains on disposal of Canadian Holdings and
Slide 40: Reconciliation of Net Income to Adjusted EBITDA and CAFD (2017)
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD)(1) (millions) Q4 2017 2017 Net income (loss) $ (56) $ 114 Add back: Depreciation and amortization 57 226 Interest expense 44 199 Income taxes 114 167 Tax credits 70 213 Benefits associated with differential me
Slide 41: NEP - PG&E Related Projects
NEP - PG&E Related Projects 12/31/18 Run 12/31/18 Financing PPA Price Rate CAFD Financing Maturity Project Customer MW COD Term ($/MWh)(1) ($MM) Financing Balance Date Genesis Solar PG&E 250 Mar-14 25 $214 $41 - $45 Genesis Solar LLC $402(2) 2038 Genesis Solar Funding LLC $254 2038 Desert Sunlight 3
Slide 42: NEP Wind Production Index
NEP Wind Production Index(1)(2) A 1% change in the wind production index equates to roughly $8 - $10 MM of adjusted EBITDA for 2019 1) Represents a measure of the actual wind speeds available for energy production for the stated period relative to long-term average wind speeds; the numerator is calc
Slide 43: NEP's holdco leverage target is consistent with its 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) (5) S&P Range 2018 YE 2019 Holdco Debt/EBITDA 4.0x - 5.0x 3.8x 4.0x - 5.0x Ba1 Actual Target (2) (4) (5) Moody's Range 2018
Slide 44: Expected Cash Available for Distribution (2018 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,100-$1,250 ($15-$25) ($75-$85) $1,000-$1,150 ($200-$250) ($400-$480) ($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 45: Expected Cash Available for Distribution (2019 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($265-$315) ($470-$550) ($30-$35) ($5-$15) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service(2
Slide 46: 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 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 federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 48: 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 49: 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 50: 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