Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q3 2019 Earnings Presentation
46 slides from Nextera Energy's earnings presentation, Oct 22, 2019
Slide 1: Earnings Conference Call Third Quarter 2019
Earnings Conference Call Third Quarter 2019 October 22, 2019
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results These presentations include 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 delivered strong third quarter results
NextEra Energy delivered strong third quarter results NextEra Energy Third Quarter 2019 Highlights • NEE grew adjusted EPS by ~10% year-over-year • Continued strong execution at FPL – Regulatory capital employed growth of ~8% versus prior-year comparable quarter – Customer bills remain nearly 30% be
Slide 4: FPL's earnings per share increased 3 cents from the prior-year comparable quarter
FPL’s earnings per share increased 3 cents from the prior- year comparable quarter Florida Power & Light Results – Third Quarter Net Income EPS ($ MM) $683 $1.37 $1.40 $654 2018 2019 2018 2019 4
Slide 5: Continued investment in the business 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(1) (Excluding Accumulated Deferred Income Taxes) Third $B Quarter 40.0 $36.7 FPL – 2018 EPS $1.37 35.0 $33.9 Drivers: 30.0 New investment
Slide 6: Gulf Power – Third Quarter 2019
Gulf Power contributed adjusted EPS of 16 cents before accounting for financing costs reflected at Corporate & Other Gulf Power – Third Quarter 2019 Results(1) Highlights • Achieved regulatory ROE of ~9.8% for 12 months ending GAAP Adjusted September 2019 – For 2019, expect to be in the upper Net In
Slide 7: Florida's economic growth remains strong
Florida’s economic growth remains strong Florida Economy Florida Unemployment & Labor Participation Rates(1) Florida Consumer Sentiment(2) 12% 63% 110 10% 100 Labor 62% Participation 8% Rate 90 (Right Axis) 61% 6% 80 60% 4% 70 2% 59% 60 0% 58% 50 Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-1
Slide 8: FPL had continued strong customer growth; Gulf Power customer growth roughly flat
FPL had continued strong customer growth; Gulf Power customer growth was roughly flat due to impacts from Hurricane Michael Customer Characteristics FPL Retail kWh Sales FPL Growth(1,2) (Change vs. prior-year period) (Change vs. prior-year quarter) 102.7 100 Third Vero Impact Quarter 80 # of 60 UKU
Slide 9: Energy Resources' adjusted EPS increased ~19%
Energy Resources’ adjusted EPS increased ~19% from the prior-year comparable quarter Energy Resources Results(1) – Third Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $367 $0.75 $424 $0.87 $346 $0.73 $212 $0.44 2018 2019 2018 2019 2018 2019 2018 2019 1) Attributable to NEE, see A
Slide 10: Energy Resources' adjusted EPS growth driven by new investments
Energy Resources’ adjusted EPS growth was primarily driven by contributions from new investments Energy Resources Third Quarter Adjusted EPS(1) Contribution Drivers $1.00 ($0.01) $0.03 ($0.10) $0.22 $0.87 $0.80 $0.73 $0.60 $0.40 $0.20 $0.00 Q3 2018 New Existing Gas Other Q3 2019 Adjusted EPS Investm
Slide 11: Energy Resources had another strong quarter of origination success
Energy Resources had another strong quarter of origination success Energy Resources Development Program(1) • Added 1,373 MW to renewables backlog – 285 MW of wind – 747 MW of solar plus 341 MW of battery storage 2019 – 2020 2019 – 2020 2021 – 2022 2021 – 2022 2019 – 2022 Signed Current Signed Curren
Slide 12: NextEra Energy's adjusted earnings per share increased ~10%
NextEra Energy’s adjusted earnings per share increased ~10% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Third Quarter GAAP 2018 2019 Change FPL $1.37 $1.40 $0.03 Gulf Power - $0.16 $0.16 Energy Resources $0.44 $0.75 $0.31 Corporate and Other $0.29 ($0.50) ($0.79) Total $
Slide 13: We remain well positioned to continue our strong adjusted EPS growth
We remain well positioned to continue our strong adjusted EPS growth NextEra Energy’s Adjusted Earnings Per Share Expectations • For 2019 through 2021, expect 6% - 8% growth off a 2018 base $10.00 - of $7.70, plus the expected $9.40 - $10.75 accretion from Florida $8.70 - $9.95 acquisitions $9.20 $8
Slide 14: NEP delivered strong financial results and continued solid execution
NEP delivered strong financial results and continued solid execution against its growth initiatives NextEra Energy Partners Third Quarter 2019 Highlights • Achieved adjusted EBITDA and CAFD growth of 55% and 81%, respectively – Excluding all contributions from the Desert Sunlight projects, CAFD incr
Slide 15: NEP's strong year-over-year growth driven by new projects
NEP’s strong year-over-year growth was primarily driven by contributions from new projects NextEra Energy Partners – Third Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $350 $175 $13 ($4) ($1) $315 ($4) $104 $15 ($4) $147 ($22) $300 $150 $59 $250 $125 $125 $203 $200 $100 $81 $150 $75 $100 $5
Slide 16: NEP Financing Update
The financing transactions executed this quarter further enhance NEP’s financing flexibility going forward NextEra Energy Partners – Financing Update • Meade acquisition expected to be primarily financed with: – ~$920 MM in partially amortizing project finance debt and ~$170 MM convertible equity po
Slide 17: NEP does not expect to need further asset acquisitions until 2021
Following the Meade transaction, NEP does not expect to need any further asset acquisitions until 2021 to achieve its targeted distribution growth expectations NextEra Energy Partners Adjusted EBITDA and CAFD Expectations Adjusted CAFD(4) CAFD EBITDA(3) (Including (Excluding Desert PG&E-Related) Sun
Slide 18: Q&A Session
Q&A Session NeExTera’ NexTera energy” ENERGY & PARTNERS 18
Slide 19: Appendix
Appendix NeExTera’ NexTera energy” ENERGY & PARTNERS 19
Slide 20: NextEra Energy
NEXT@ra ENERGY &%
Slide 21: Credit Metrics
NextEra Energy’s credit metrics remain on track Credit Metrics A- Downgrade Target S&P Range Threshold 2019 FFO/Debt 13%-23% 21% >21% Debt/EBITDA 3.5x-4.5x <4.5x Baa Downgrade Target Moody’s Range Threshold 2019 CFO Pre-WC/Debt 13%-22% 18% >18% CFO-Div/Debt 9%-17% >12% A Downgrade Target Fitch Midpo
Slide 22: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2019 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.00 - $0.01 • Timing of investment ± $0.01 - $0.02 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.01 • Wi
Slide 23: NextEra Energy Resources Projected 2019 Portfolio Financial Information
NextEra Energy Resources Projected 2019 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Adjusted credits included in Maintenance Pre-Tax Cash Remaining EBITDA(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Contract Life (8) NEER (9)
Slide 24: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2018 2019 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 3,637 90% 93% 97% 94% 3,847 88% 93% 3,847 93% 3,744 91% 3,742 91% 90% 104% 96% 93% West 3,243 103% 111% 97% 104% 3,286 93
Slide 25: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2019 – 2020: 2019 – 2020: Burke ND 200 Blythe III CA 125 Emmons-Logan ND 216 New England Various 49 Crowned Ridge I SD 215 Wilmot AZ 100 Sky River CA 62 Blythe IV CA 125 Roundhouse WY 225 Quitman GA 150 Soldier Creek
Slide 26: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019 – 2020: Post – 2022: Montauk NY 5 8.0 Proxima CA 5 4.0 Wilmot AZ 30 4.0 Contracted, not yet announced 443 Rush Springs OK 10 2.0 Total: 448 Minuteman MA 5 2.0 Total: 50 2021 – 2022: Dodge Flat NV 50
Slide 27: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 6/30/19 ($122) Amounts Realized During 3rd Quarter 3 Primary Drivers: Change in Forward Prices (all positions) (213) Interest Rate Hedges ($557) Subtotal – Income Statement (210) Revenue Hedges 208
Slide 28: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 3rd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance (2) Description 6/30/2019 Realized Prices (Loss) 9/30/19 Pretax Amounts Gross Natural gas related positions $ 745 $ 32 $ 27 $ 59
Slide 29: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) (1) Gain / (Loss) Asset / (Liability) Balance Total Description 9/30/19 4Q 2019 2020 2021 2022 2023 - 2047 2019 - 2047 Pretax gross amounts Natural gas related positions $ 804 $ (14) $ (88) $ (109) $ (119) $ (474) $ (804) Gas Infrastru
Slide 30: Reconciliation of GAAP Net Income to Adjusted Earnings (Q3 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 2019) Florida Power Gulf Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Power Resources Other Inc. Net Income (Loss) Attributable to NextEra
Slide 31: Reconciliation of GAAP Net Income to Adjusted Earnings (Q3 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 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 32: 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 33: 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 34: 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 35: NextEra Energy Partners
NExTera energy’ PARTNERS Z
Slide 36: Reconciliation of Net Loss to Adjusted EBITDA and CAFD
Reconciliation of Net Loss to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions)- Q3 2019 Q3 2018(1) Net income (loss) $ (243) $ 110 Add back: Depreciation and amortization 68 49 Interest expense 372 (31) Income taxes (18) 15 Tax credits 118 60 Amortization of intangible assets -
Slide 37: Reconciliation of Net Loss to Adjusted EBITDA and CAFD (YTD)
Reconciliation of Net Loss to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions)- YTD 2019 YTD 2018(1) Net income (loss) $ (488) $ 383 Add back: Depreciation and amortization 192 152 Interest expense 735 93 Income taxes (35) 13 Tax credits 345 202 Gains on disposal of Canadian Hol
Slide 38: NEP Wind Production Index
NEP Wind Production Index(1) 2018 2019 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 584 87% 78% 95% 87% 793 93% 92% 793 93% 1,213 95% 1,213 91% 92% 104% 96% 95% West 908 99% 111% 97% 102% 1,104 92% 100% 1,104 81% 1,104 93
Slide 39: NEP Credit Metrics
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 Target S&P(1) Range YE 2019(4) HoldCo Debt/EBITDA 4.0x - 5.0x 4.0x - 5.0x Ba1 Target Moody's(2) Range YE 2019(4) Total Consolidated Debt/EBITDA <7
Slide 40: NEP Portfolio Year-End Adjusted EBITDA Run-Rate Walk
NEP Portfolio Year-End Adjusted EBITDA Run-Rate Walk ($MM) $1,400 $25-$35 ($10-$20) $1,225-$1,400 $90-$100 $1,200 $100-$115 $1,000-$1,150 $1,000 $800 $600 $400 $200 $0 2018 2019 Portfolio Meade Other (1) IDRs & 2019 Run Rate Addition Acquisition Corp. Run Rate Adj. EBITDA Expenses Adj. EBITDA 40 1)
Slide 41: NEP Portfolio Year-End CAFD Run-Rate Walk
NEP Portfolio Year-End CAFD Run-Rate Walk ($MM) $700 $55-$65 ($70-$90) $25-$30 $25-$35 ($10-$20) $600 $560-$640 ($52-$56) $60-$66 $505-$585 $122-$132 $500 $400 $360-$400 $300 $200 $100 $0 2018 2019 Meade Repowerings Genesis Debt Other (2) IDRs & 2019 Desert 2019 Run Rate Portfolio Acquistion Debt Se
Slide 42: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD; $ MM) $1,350-$1,525 ($20-$30) ($90-$100) $1,225-$1,400 ($175-$225) ($420-$500) ($40-$45) ($5-$15) $560-$640 ($52-$56) $505-$585 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Tax Non-Cash Maintenance Estimated Dese
Slide 43: 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 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 federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 45: 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 46: 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