Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (December 2017)
60 slides from Nextera Energy's investor presentation, December 2017
Slide 1: December 2017 Investor Presentation
December 2017 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 • ~$74 B market capitalization(1) • ~46.5 GW in operation(2,3) • ~$97 B in total assets(3) • One of the largest electric • The world leader in utilities in the nation by electricity generated retail MWh sales from th
Slide 4: Built on best-in-class operational excellence and financial strength, focused on clean generation
Built on a foundation of best-in-class operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2016 Utility & Corporate Benchmarks 2016 NextEra Energy Fuel Mix MWhs(3) Operational Cost(1) SAIDI(2) ($/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) 20% 18% 60% $6.19 53% $5.71 16% $5.30 50% $4.97 15% 43% $4.39 $4.57 $3.84 $4.05 $4.30 12% 40% $3.49 29% $3.04 10% 30% $2.63 20% 5% 10% 0% 0% '05 '06 '07 '08 '09 '10 '11 '12
Slide 6: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 11/27/2017 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $73,852 NextEra Energy 2 $38,185 2 $64,524 3 $34,476 3 $62,
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 • ~26.5 GW in operation • $10.9 B(1) in operating revenues • ~$50 B in total assets 1) A
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 founded on 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 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 In construction and on track to Solar
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 ~$140 ~$120 $120 ~$109 ~ $107 ~$103 $100 Good $80 $60 $40 $20 $- FPL FPL (1) FPL (2) FL IOUs(3) National (4) 2006 2017 2020E Average Average FPL expects the ty
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: Demand for wind and solar expected to be robust through end of decade
Demand for both wind and solar energy is expected to be robust through the end of the decade Industry Estimates of Wind & Solar Market Potential 2017 - 2020(1) Wind Additions Solar Additions 45 45 40 40 37 Avg: 36 GW 40 35 35 32 35 30 30 25 26 GW 25 GW 25 24 Avg: 22 GW 20 20 15 15 13 10 10 5 5 0 0 B
Slide 17: Energy Resources Development Program
Energy Resources’ competitive advantages position us well for continued success Energy Resources Development Program(1) (Signed Contracts as of October 26, 2017) 2017 – 2018 2017 – 2018 2019 – 2020 2019 – 2020 2017 – 2020 Signed Current Signed Current Current Contracts Expectations Contracts Expecta
Slide 18: Battery efficiency improvements and cost declines expected to expand 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: Expanding 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 2 - 3¢ /Storage Generation Wind Solar Gas Coal
Slide 21: NextEra Energy's Financial Expectations
We remain well positioned to achieve our adjusted EPS compound annual growth rate of 6% to 8% through 2020 NextEra Energy’s Financial Expectations • Remain committed to maintaining the strength of $7.85 - our balance sheet $8.45 • Expect total of $5 B to $7 B $6.80 - $6.35 - $7.30 in excess balance
Slide 22: NextEra Energy presents an attractive value proposition
NextEra Energy presents an attractive value proposition NextEra Energy Value Proposition • Proven track record with 9% - 11% experienced management team per year • Consistent low-risk strategy with largely regulated and long-term contracted portfolio and growth Expected • Constructive regulatory Adj
Slide 23: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 24: NextEra Energy Partners' Portfolio
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 25: Since the IPO, NEP has grown distributions and delivered total unitholder return
Since the IPO, NEP has grown distributions by ~109% and delivered total unitholder return of 73% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices $1.57 100% 90% 80% 73% 70% 60% 50% 44% 42% 40% 30% $0.75 20% 10% Yie 0% -10% (15%) (2) NEP S&P 500 S&P 500 YieldCo (3) Utilities Ave
Slide 26: NEP's value proposition built on 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 27: NEP focus 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 28: Acquisitions, organic growth and third party M&A provide visibility to 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 29: Governance changes at NEP to enhance LP unitholder rights
We have implemented certain governance changes at NEP in order to enhance LP unitholder rights Enhancing Unitholder Governance Rights Prior Structure New Structure • BOD at NEP GP • New BOD at NEP LP Board of • Three Directors appointed by GP (NEE) Directors • NEE appointed all Directors • • Four Di
Slide 30: NEP's financing optimization to minimize need for common equity
NEP’s ongoing financing optimization is expected to minimize the need for common equity Optimizing The Capital Structure Investor IDR Fee Low double-digit Investor Demand Modification ROEs on acquisitions Demand Access Access to Utilized high-yield Dividend Alternative to Low Low Cost Financing debt
Slide 31: 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 Moody’s S&P Fitch Debt Revolving Credit Ba1 BB BB+ Convertible Facility Stable Stable Stable Preferred O
Slide 32: NEP's ongoing financing initiatives
NEP’s ongoing financing initiatives are expected to minimize the need for common equity NEP Financing Update • $550 MM Convertible Preferred Offering – 4.50% coupon – 15% conversion premium • $300 MM Convertible Debt/Capped Call Transaction – 1.5% coupon for 3 years – Initial conversion rate represe
Slide 33: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/17 Run Rate(2) $875 - $975 MM $310 - $340 MM 12/31/18 Run Rate(3) $1,050 - $1,200 MM $360 - $400 MM Unit Distributions 2017(4) $1.58 - $1.62 annualized rate by year-end 2016 – 2022(5) 12% - 15% average annual
Slide 34: Tenor of NEP's distribution growth guidance relative to peers
The tenor of NEP’s distribution growth guidance relative to peers reflects our confidence in the long-term opportunity Valuing NEP’s Growth Guidance Tenor vs. High Growth MLP Peers(1) Long-Term/Terminal Value Drivers NEP • 18-year average remaining contract life(2) of NEP’s assets limits commodity p
Slide 35: 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 2022 12% - 15% • Diversified portfolio wi
Slide 36: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 36
Slide 37: NextEra Energy
NExTera’ ENERGY @
Slide 38: FPL's Base Rate Case Settlement
FPL’s settlement agreement is designed to help deliver continued outstanding customer value FPL’s Base Rate Case Settlement • Effective January 2017 through December 2020 • Retail base revenue increases according to the following schedule: – $400 MM beginning January 2017 – $211 MM beginning January
Slide 39: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2016 2017 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 3,054 98% 84% 105% 96% 3,039 106% 100% 3,039 101% 3,039 104% 3,039 83% 72% 92% 83% 98% West 2,718 111% 100% 105% 105% 3,1
Slide 40: Contracted Renewables Development Program
Contracted Renewables Development Program(1) Wind Location MW Solar Location MW 2017 – 2018: 2017 – 2018: Oliver III ND 99 Whitney Point CA 20 Huron MI 150 Marshall MN 62 Golden Hills North CA 46 Stuttgart AR 81 Bluff Point IN 120 Westside CA 20 Eight Point NY 102 Blue Bell TX 30 Dodge County MN 200
Slide 41: 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.34 $ 3.23 $ 3.27 $ 4.07 $ 3.97 $ 4.74 $ 4.59 $ 4.56 $ 4
Slide 42: 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, net OTTI losses on securities held in NextEra Energy Resources’ nuclear deco
Slide 43: 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 44: 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 45: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 46: NEP Portfolio Overview
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 47: NEP Wind Production Index
NEP Wind Production Index(1) 2016 2017 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 West 659 98% 94% 113% 101% 659 106% 102% 659 90% 909 92% 909 85% 85% 86% 85% 89% Texas 250 102% 84% 94% 94% 250 98% 92% 250 89% 250 91% 250 79% 6
Slide 48: 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 49: NEP issued $550 MM of convertible preferred securities
In November, NEP issued its previously announced $550 MM of convertible preferred securities Convertible Preferred Offering(1) • NEP’s 4.50% coupon is the Coupon at Issuance(2) lowest ever for a preferred security in the MLP or Yieldco 10.75% sector 9.5% 10.0% • Provides a low cash cost of 8.0% 8.0%
Slide 50: NEP convertible debt and capped call transaction
NEP has issued $300 MM of convertible debt and entered into a capped call transaction in connection with the offering Convertible Debt/Capped Call Transaction • Low 1.5% coupon for 3 years Impact of NEP Unit Price • Initial conversion rate At Conversion(1) represents a 25% premium $65 Cap Price ~$63
Slide 51: NEP refinanced its ~$1.1 B HoldCo debt
NEP has further de-risked LP distributions by refinancing its existing ~$1.1 B HoldCo debt balance at attractive rates and pushing its maturity into the middle of the next decade NEP HoldCo Debt Refinancing • NEP refinanced its ~$1.1 B NEP HoldCo Debt Maturity Profile HoldCo debt balance with $ MM s
Slide 52: NEP upsized revolving credit facility
NEP has upsized its revolving credit facility while also reducing borrowing costs, extending the maturity date and increasing the size of its bank group NEP Credit Revolver Changes Old Revolver Amended Revolver Facility Size $250 MM $750 MM Pricing 3.0x Leverage Ratio(2): 225 bps 175 bps 4.0x Levera
Slide 53: NEP 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(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 54: Expected Cash Available for Distribution (2017 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $960-$1,060 ($15-$25) ($60-$70) $875-$975 ($240-$290) ($270-$320) $ 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 55: Expected Cash Available for Distribution (2018 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,150-$1,300 ($20-$30) ($75-$85) $1,050-$1,200 ($240-$320) ($380-$460) ($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 56: 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 57: 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 58: 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 59: 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 60: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common 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 IDR fee may be assig
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