Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (December 2013)
51 slides from Nextera Energy's investor presentation, December 2013
Slide 1: December 2013 Investor Presentation
December 2013 Investor Presentation
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results Any statements made herein about future operating and/or financial results and/or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These f
Slide 3: Table of Contents
Table of Contents • NextEra Energy, Inc. Overview Slide 4 • Florida Power & Light Slide 12 • NextEra Energy Resources Slide 23 • NextEra Energy Transmission Slide 29 • NextEra Energy, Inc. Financial Review Slide 31 • Appendix Slide 39 3
Slide 4: NextEra Energy – Investment Proposition
NextEra Energy is well-positioned for future growth NextEra Energy – Investment Proposition • Above-average and highly visible growth through 2016 – Four years of regulatory certainty at FPL – Strong backlog at Energy Resources with upside potential • Strong and increasing cash flow from operations
Slide 5: 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 • $37.7 B market capitalization(1) • 42,662 MW in operation • $67 B in total assets • One of the largest U.S. electric utilities • U.S. leader in renewable generation • 4.6 MM customer accounts • Assets primarily in
Slide 6: Built on a foundation of operational excellence and financial strength
NextEra Energy is built on a foundation of operational excellence and financial strength SAIDI: System Average (1) Interruption Duration Index Utility Credit Ratings(3) 40% Minutes 150 36% FL Industry Average Good 35% 125 NextEra Energy 100 30% FPL 75 50 25% 25 20% 20% '06 '07 '08 '09 '10 '11 '12 20
Slide 7: One of the cleanest emissions profiles among top 50 power producers
NextEra Energy has one of the cleanest emissions profiles among the nation’s top 50 power producers NextEra Energy 2012 Fuel Mix(1) SO2 Emissions Rates(2) (MWh) (Lbs/MWh) 9.0 Nuclear Solar <1% 7.5 22% Nuclear Wind 21%15% Wind Coal 3% 6.0 14% Hydro 1% 4.5 Oil <1% NextEra 3.0 Energy Natural Gas 59% 1.
Slide 8: In 2012, we continued our long-term record of delivering shareholder value
In 2012, we continued our long-term record of delivering shareholder value Adjusted Earnings Per Share(1) Total Shareholder Return(2) 20% 18% 50% 47% $4.57 16% $4.30 $4.39 40% $3.84 $4.05 15% 36% $3.49 28% $3.04 30% $2.41 $2.48 $2.49 $2.63 10% 20% 5% 1% 10% 0% 0% '02 '03 '04 '05 '06 '07 '08 '09 '10
Slide 9: Leading total shareholder return on a YTD basis
NextEra Energy has one of the leading total shareholder returns on a YTD basis in our industry and outperformed both the S&P 500 and the S&P 500 Utilities Index over the period Top 10 Power Companies(1) – YTD Total Shareholder Return 35% 32.5% 30% 29.0% 29.0% 28.4% 25% 20% 16.5% 16.5% 15% 13.5% 14.1
Slide 10: 2013 – 2016 Capital Expenditures
At our investor conference in March, we identified potential capital spending of up to $23 B in 2013 to 2016; we have now firmed up ~$19 B of investment opportunities 2013 – 2016 Capital Expenditures(1) • FPL $ MM 25,000 – Includes cap ex for modernizations, incremental storm hardening, reliability/
Slide 11: Moving forward on ~$7 B of incremental investments
We are moving forward on ~$7 B of incremental investments Incremental Capital Opportunities 2013 to 2016 Opportunity Status Projected Cap Ex FPL • Storm hardening PSC decision expected in November ~$400 MM • Reliability investment Infrastructure improvements on track ~$700 MM Hearings to be held in
Slide 12: 12
12
Slide 13: 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(1) • One of the largest U.S. electric utilities • Vertically integrated, retail rate-regulated • 4.6 MM customer accounts • 24,665 MW in operation • $10.1 B in operating revenues • $36 B in total assets 13
Slide 14: FPL's Backlog of Major Capital Projects
We have made excellent progress on our backlog of major capital projects in 2013 FPL’s Backlog of Major Capital Projects Modernization Projects Nuclear Uprates • Cape Canaveral completed • Completed our extended ahead of schedule and under nuclear power uprate budget program in April 2013 – COD Apri
Slide 15: Florida's economy continues to gradually improve
Florida’s economy continues to gradually improve Florida Economy Florida Unemployment Rate(1) Florida Building Permits(2) 12% 12,000 10% 10,000 8% 8,000 6% 6,000 4% 4,000 2% 2,000 0% 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Florida Consumer
Slide 16: Keeping nominal O&M expense flat could reduce cost per retail kWh
Keeping nominal O&M expense flat from 2012 could reduce the cost per retail kWh substantially by 2016 Base O&M(1) Cost Per Retail kWh O&M Nominal vs. Real ¢/kWh 1.60 = Nominal Base O&M = Nominal Base O&M Flat From 2012 1.50 1.47 ¢ = Real Base O&M = Real Base O&M Flat From 2012 1.40 1.34 ¢ 1.30 Poten
Slide 17: FPL Productivity Improvements
Project Momentum has provided a line of sight to achieve our goal of keeping nominal O&M expenses flat in 2016 FPL Productivity Improvements • Moving forward with several initiatives with significant O&M cost savings in the following areas: – Nuclear operations – Transmission and distribution – Cust
Slide 18: Incremental Capital Expenditures Through 2016
In March we laid out $4 B to $5 B in incremental capital expenditures that we continue to develop Incremental Capital Expenditures Through 2016 • Incremental storm hardening • Infrastructure / reliability investment • Generation upgrades $4 B - $5 B • Natural gas pipelines(1) • Vero Beach acquisitio
Slide 19: Incremental Storm Hardening Investment
FPL filed a plan with the PSC to invest in storm hardening and reliability opportunities Incremental Storm Hardening Investment • FPL filed plans with the PSC to continue investing in strengthening the grid against storms and help keep everyday reliability high – Expect to invest an additional ~$400
Slide 20: Florida PSC approved FPL's natural gas pipeline proposal
The Florida Public Service Commission has approved FPL’s natural gas pipeline proposal Natural Gas Pipeline Investments • Best economic solution for customers – Sabal Trail Transmission (Spectra Energy): – ~465 miles to Central Florida Hub – Estimated capital cost of ~$3 B – NextEra Energy to invest
Slide 21: Generation Upgrades
Achieving improved environmental standards require replacement of FPL’s fleet of existing gas turbine peakers Generation Upgrades • Petition filed with FPSC to upgrade FPL’s peaking capacity with more efficient, advanced combustion turbines (CTs) – ~$820 million program • If approved by FPSC, costs
Slide 22: Recovery of FPL's incremental capital investments
FPL’s incremental capital investments will be recovered either via existing base rates or separate recovery mechanisms Recovery Mechanisms for FPL Capital Expenditures Capital Expenditures Recovery Mechanism • Base infrastructure (T&D, etc.) • Maintenance Absorbed in base rates • Incremental storm h
Slide 23: NextEra Energy Resources
NEXTeCra’ ENERGY & RESOURCES
Slide 24: Energy Resources' risk profile continues to improve
Energy Resources’ risk profile continues to improve as the business mix shifts to more long-term contracted assets Energy Resources’ Adjusted EBITDA(1) 100% 11% 15% 14% 75% 26% 22% 40% 50% 59% 64% 25% 49% 0% 2009 2012 2014 Long‐Term Contracted Merchant Peripheral Businesses In 2014, we expect 64% of
Slide 25: Generation portfolio of over 11,000 MW of contracted assets
Our generation portfolio consists of over 11,000 MW of contracted assets, which are primarily wind and nuclear Energy Resources: Contracted Assets(1) Technology MW Wind 8,213 Nuclear 1,621 Solar 193 Natural Gas 1,004 Total: 11,031 25 (1) As of December 31, 2012
Slide 26: March 2013 Investor Conference backlog
Our March 2013 Investor Conference backlog of signed long- term PPAs for wind and solar projects translates into roughly $3.6 B of capital investment through 2016 March 2013 Investor Estimated Cap Ex(2) for Wind and Conference Backlog(1) Solar Projects in the IC Backlog • 175 MW U.S. wind for 2013 (
Slide 27: Renewable Energy Development Opportunities
Energy Resources has strong renewable energy prospects beyond the 2013 Investor Conference backlog Renewable Energy Development Opportunities(1) Wind Solar • PTC extension creates an • Executed agreement to opportunity for new U.S. acquire 250 MW long- wind development term contracted solar • ~1,175
Slide 28: Business mix shifts toward long-term contracted assets through 2016
The resulting business mix continues to shift toward long-term contracted assets through 2016 Energy Resources’ Adjusted EBITDA(1) 100% 11% 14% 15% 75% 22% 19% 40% 50% 64% 66% 25% 49% 0% 2009 2014 2016 Long‐Term Contracted Merchant Peripheral Businesses 28 (1) See appendix slide 48 for definition of
Slide 29: NextEra Energy Transmission
NEXT@ra’ ENERGY & TRANSMISSION
Slide 30: Competitive Transmission Opportunity Set
The overall market for new transmission projects is aligned regionally, with increasing opportunities to compete Competitive Transmission Opportunity Set • Current operations include: – Lone Star Transmission: ~330-mile portion of the Texas CREZ line – New Hampshire Transmission: Independent owner i
Slide 31: Financial Review
NEXT@ra ANANCIAL REVIEW
Slide 32: Balance sheet strength and credit play an important role in our strategy
Balance sheet strength and credit play an important role in our strategy NextEra Energy 2014 Credit Metric Targets(1) Moody’s Baa Range NEE Target • CFO Pre-WC/Debt 13% - 22% 20% • Debt Capitalization 45% - 55% 50% Fitch A Range NEE Target • FFO/Debt 20% - 26% 21% • FFO/Interest 4.5x - 5.6x 5.2x S&P
Slide 33: Cash flow available to support credit in 2014 expected to be strong
Cash flow available to support credit in 2014 is expected to be strong 2014 Expected Cash Flow Analysis ($ billions) NEE Capital Holdings FPL Consolidated (1) Adjusted EBITDA $2.3 - $2.6 $4.1 - $4.3 Plus: Monetization of Tax Benefits 0.2 - 0.3 N/A Less: Limited Recourse Debt Service (0.9) - (1.0) (0
Slide 34: Financing Strategy: 2013 - 2016
We have an agreement to issue ~$1 B of common equity to support our growth objectives through 2016 Financing Strategy: 2013 - 2016 • At FPL: – Maintain consistent balance sheet ~60% regulatory equity ratio – Focus on long-dated maturities, but may selectively shorten up to meet market demand • At Ca
Slide 35: Market risk mitigated by significantly hedged position
Market risk will be mitigated by our significantly hedged position over the next several years Energy Resources Equivalent Gross Margin Contracted or Hedged(1) 99% 100% 100% 100% 100% 100% 96% 93% 89% 80% 60% 40% 20% 0% 2013 2014 2015 2016 Existing New (1) Projected equivalent gross margin includes
Slide 36: Business mix shifting toward regulated and long-term contracted
NextEra Energy’s business mix is expected to continue to shift towards more regulated and long-term contracted Adjusted EBITDA(2) from Adjusted Earnings from Regulated and Long-Term Regulated Businesses(1) Contracted Operations 100% 100% 84% 78% 80% 80% 65% 58% 60% 60% 40% 40% 20% 20% 0% 0% 2011 201
Slide 37: Dividend Per Share Growth and Dividend Policy
NextEra Energy’s current dividend policy reflects its expected increase in the proportionate contribution from its rate-regulated businesses and long-term contracted assets Dividend Per Share(1) Growth Dividend Policy • Implemented dividend policy 2011 to 2014 CAGR: ~10% $2.80 - $3.00 ? $2.64(2) of
Slide 38: NEX Tera
NEX Tera ENERGY &
Slide 39: Appendix
39 Appendix NeExTera’ ENEBIGY 2
Slide 40: Reconciliation of Base O&M Cents per kWh to GAAP O&M
Reconciliation of Base O&M Cents per kWh to GAAP O&M Cents per kWh 1988 2000 2005 2012 ($ in millions) Base O&M (A) $1,131 $984 $1,199 $1,500 Clause 32 77 99 269 Other 0 1 9 4 GAAP O&M (B) $1,163 $1,062 $1,307 $1,773 Retail delivered kWhs (in millions) (C) 59,163 88,128 101,980 102,128 Base O&M cent
Slide 41: 2014 Expected Cash Flow Analysis Debt Detail
2014 Expected Cash Flow Analysis Debt Detail (1) YE 2012 Expected 2014 Notes ($ MM) ($ B) FPL Senior Debt and Bank Loans $8,290 $8.4 - $8.6 Debt excluded from Expected Cash Flow Analysis slide Storm-recovery bonds and other $492 Secured by FPL customer bill surcharge FPL long-term debt, including cu
Slide 42: Projected 2014 Portfolio Financial Information
NextEra Energy Resources Projected 2014 Portfolio Financial Information (as of September 9, 2013) Equivalent Equivalent Equivalent 1 1 2 3 Expected Gross Margin % Gross EBITDA Remaining Following Generation Range Margin Range Contract Year PTC MWs Twh's $ in millions Hedged $ in millions Life Expira
Slide 43: Reconciliation of Energy Resources Equivalent EBITDA to NEECH Adjusted EBITDA
Reconciliation of Energy Resources Equivalent EBITDA to NEECH Adjusted EBITDA ($ millions) 2014 NEER Equivalent EBITDA(1) $ 3,250 Midpoint from Projected 2014 Portfolio Information slide 42 in Appendix Less: Tax credits (430) Includes grossed up tax credits and amortization of CITC Tax equity costs
Slide 44: NextEra Energy Resources Portfolio Additions
NextEra Energy Resources Portfolio Additions(1) (2) March 2013 Investor Conference Backlog Incremental Opportunities Incl. in 9/30/13 Incl. in 9/30/13 U.S. Wind: MW COD Form 10-Q(3) U.S. Wind: MW COD Form 10-Q(3) Tuscola Bay II(4) 100.3 2013 Yes Tuscola Bay II (4) 100.3 2013 Yes Steele Flats(4) 74.8
Slide 45: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS 2014 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.02 • Timing of investment ± $0.02 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.03 - $0.04 • Wind resource (± 1% d
Slide 46: Reconciliation of Adjusted Earnings Per Share to Earnings Per Share
NextEra Energy, Inc. Reconciliation of Adjusted Earnings Per Share to Earnings Per Share 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Earnings Per Share (assuming dilution) $1.38 $2.53 $2.48 $2.34 $3.23 $3.27 $4.07 $3.97 $4.74 $4.59 $4.56 Adjustments: Net unrealized mark-to-market (gains)
Slide 47: Reconciliation of 2011 Adjusted EBITDA to Net Income
Reconciliation of 2011 Adjusted Earnings Before Interest, Taxes Depreciation and Amortization (Adjusted EBITDA) to Net Income (Full-Year Ended December 31, 2011) GAAP Adjustments Adjusted (1) Net income $1,923 ($86) $1,837 Add back interest 1,034 0 1,034 (1) Add back income taxes 529 (57) 472 Add ba
Slide 48: Definitional information
Definitional information NextEra Energy Resources, LLC. Adjusted EBITDA (Slides 24, 28, 36) Adjusted EBITDA includes Energy Resources’ consolidated investments as well as its share of equity method investments. Adjusted EBITDA for each category set forth above is represented by (a) revenue, includin
Slide 49: 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 50: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) failure or breach of NextEra Energy's information technology systems; risks to NextEra Energy's retail businesses of compromise of sensitive customer data; risks to NextEra Energy of volatility in the market values of deriv
Slide 51: NEX Tera
NEX Tera ENERGY &
NextEra Energy — Investor Presentation (December 2013) on 6ix