Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (March 2019)
56 slides from Nextera Energy's investor presentation, March 2019
Slide 1: March 2019 Investor Presentation
March 2019 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 d
Slide 3: NextEra Energy is comprised of strong businesses supported by a common platform
NextEra Energy is comprised of strong businesses supported by a common platform • ~$90 B market capitalization(1) • ~50 GW in operation(2) • $100+ B in total assets(3) • The largest electric utility in the United States by retail MWh sales • Provides electric service • The world leader in to over 46
Slide 4: Our long-term success is the result of a balanced approach to our business practices
Our long-term success is the result of a balanced approach to our business practices, our people, our communities and the environment Creating a Sustainable Energy Future for America Investing in our Team Respecting the Environment & Sustaining Communities(2) 2,500 CO2 Emissions Rate(1) 2,000 1.1 MM
Slide 5: 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) $7.70 $6.70 20% 90% 82% $6.18 14% 80% $5.71 $5.30 70% $4.97 $4.30 $4.39 $4.57 10% 60% $3.84 $4.05 50% $3.49 4% 37% $3.04 40% $2.63 30% 0% 30% 20% -4% 10% -10% 0% One Year T
Slide 6: Our growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 2/22/2019 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $89,958 NextEra Energy 2 $38,185 2 $65,365 3 $34,476 3 $60,8
Slide 7: 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. and we recently added Gulf Power to the portfolio Florida Regulated Utilities • FPL – ~5 MM customer accounts – ~24 GW in operation – ~$12 B in operating revenues – ~$53 B in total assets • Gulf Power – ~0.5 MM customer accounts
Slide 8: We expect to execute the same long-term strategy at Gulf Power
We expect to execute the same long-term strategy at Gulf Power that has been our core focus at FPL for many years Virtuous Circle • Unyielding commitment to customer value proposition Customer – Low bills Satisfaction – High reliability – Excellent customer service Superior • Focus on efficiency and
Slide 9: Our focus is on providing customers low bills, high reliability and outstanding service
Our focus is on providing customers low bills, high reliability and outstanding customer service Areas of Focus 1,000-kWh Residential Bill Service Reliability (“SAIDI”)(4) $160 ~$143 ~114 minutes $140 ~$129 $120 ~$119 ~$101 ~90 minutes $100 $80 ~58 minutes Good $60 $40 $20 $- FPL Gulf Power FL IOUs
Slide 10: Energy Resources is the leading North American clean energy company
Energy Resources is the leading North American clean energy company Energy Resources • World leader in electricity generated from the wind and sun • ~23 GW(1) of generation in operation – 15.0 GW wind – 2.4 GW solar Wind Natural Gas Solar Nuclear – 2.7 GW nuclear Storage Other – 2.4 GW natural gas/o
Slide 11: 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 12: Battery efficiency 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 13: Energy Resources' competitive advantages position us well
Energy Resources’ competitive advantages position us well for continued renewables development success Energy Resources – Key Competitive Advantages 2017 Top 10 U.S. Capital Investors(1) Wind O&M(2) $/MWh $20 ~$19 ~$17 ~25% Reduction $15 $B ~$12 ~$11 ~$10 $10 ~$10 ~$9 ~$8 ~$8 ~$8 $5 $0 A B C NEE D E
Slide 14: Energy Resources had a record year of renewables origination
Energy Resources had a record year of renewables origination Energy Resources Development Program(1) (Signed Contracts as of January 25, 2019) 2019 – 2020 2017 – 2020 2017 – 2018 2017 – 2020 Signed Current In Service Total Contracts Expectations U.S. Wind 1,757 4,013 5,770 5,400 – 7,800 Canadian Win
Slide 15: Energy Resources backlog of future renewables projects has never been stronger
Energy Resources backlog of future renewables projects has never been stronger Energy Resources Renewables Backlog(1) (MW) ~8,900 ~5,000 ~3,700 ~2,900 ~2,400 ~2,100 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Wind Solar Repowering Energy Storage Added ~6,500 MW of renewables to backlog over the
Slide 16: Well positioned for potentially disruptive changes to our industry
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-2023(1) (¢/kWh) Shale 3 - 4¢ w/ 4 - 5¢ Gas storage 3.5 - 5¢ 2 - 3¢ w/ adder 3 - 4¢ storage Renewables adder Big Data /Stora
Slide 17: 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 is a 31% owner of • NEP completed the $
Slide 18: Strong credit quality; focus on regulated and long-term contracted businesses
NextEra Energy continued its focus on growing regulated and long-term contracted businesses during 2018 NextEra Energy – Strong Credit Quality • We remain committed to maintaining one of the strongest balance sheets in the industry • Rating agencies recognized continued improvement in NextEra Energy
Slide 19: We expect to grow adjusted EPS at a 6% - 8% CAGR
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 20: NextEra Energy Investment Proposition
NextEra Energy’s businesses deliver strong earnings, dividend and cash flow growth and a low beta NextEra Energy Investment Proposition Track record of delivering value to shareholders High visibility into earnings growth to support 11% - 12% total return potential Low payout ratio and above a
Slide 21: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 22: 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 • ~5,330 MW of renewables – ~4,575 MW wind – ~750 MW so
Slide 23: Since the IPO, NEP has grown distributions by ~148%
Since the IPO, NEP has grown distributions by ~148% and delivered total unitholder return of 102% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices 120% $1.86 102% 100% 80% 60% 57% 53% 40% 20% 15% $0.75 0% Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q3 2016 Q4 2016 Q
Slide 24: 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 Diversified ~5.3 GW Rating(3) Year-end 2018 17-Yr Portfolio with Renewables >90% Ba1/BB/BB+ Capacity of Project Debt ~1.2x Rema
Slide 25: NEP to purchase a 611 MW portfolio of unlevered renewable projects
NEP has agreed to purchase a 611 MW portfolio of unlevered renewable projects from Energy Resources for $1.02 B(1) Portfolio Additions Remaining Counterparty Asset MW Technology Counterparty COD PPA Term(2) Credit Rating Story II 150 Wind City of Ames, IA; 2010 11 NR / NR; Google AA+ / Aa2 Silver St
Slide 26: Agreement with KKR to invest $900 MM in second convertible equity portfolio
We are also announcing an agreement with KKR to invest $900 MM in our second convertible equity portfolio financing transaction Convertible Equity Portfolio Financing 2.0(1) 2018 2019 Proceeds $750 MM from BlackRock $900 MM from KKR Less than 1% Annual “Coupon” ~2.5% for three years over a six year
Slide 27: Acquired assets and four existing NEP projects combined into a new portfolio
The acquired assets and four existing NEP projects will be combined into a new portfolio with KKR, where existing project debt will be recapitalized Transaction Overview • After closing, NEP to contribute 1,192 MW into a new portfolio Sources – 611 MW of acquired projects KKR investment $900 MM – 58
Slide 28: Second convertible equity financing provides a cash flow bridge for LP unitholders
The second convertible equity portfolio financing transaction is expected to provide a cash flow bridge for LP unitholders while the PG&E bankruptcy process is resolved Cash Flow Uplift from 2.0 Transaction $25 $25-$35 $485 - $555 ($95 - $105) ($8 - $12) ($7 - $9) $97 - $107 $410 - $480 $360 - $400
Slide 29: Transaction completes NEP's growth for the year and de-risks PG&E headwinds
This transaction completes NEP’s growth for the year and de-risks potential headwinds from the PG&E bankruptcy Transaction Benefits and Impact on NEP’s Outlook • Significant CAFD uplift enables NEP to meet 2019 year-end run rate assuming no PG&E related CAFD – Bridges the CAFD impact from the PG&E b
Slide 30: NEP continues to 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 31: Possible path to continued growth at NEP is acquisitions from Energy Resources
One possible path to continued growth at NEP is acquisitions from Energy Resources Energy Resources’ Renewable Portfolio Since NEP’s IPO(1) 25 ~8 GW ~20 GW 20 15 ~7 GW GW ~10 GW ~5 GW 10 5 0 Renewables MW Sold to NEP MW Placed in Current Backlog Current Portfolio (2) Portfolio after IPO since IPO Se
Slide 32: 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: Convertible Term Loan B High-Yield Equity Debt Moody’s S&P Fitch Portfolio Convertible Financing Revolving Preferred Credit Ba1
Slide 33: NEP's long-term outlook for distribution growth through 2023
NEP’s long-term outlook for distribution growth through 2023 is best-in-class NextEra Energy Partners Financial Expectations Annualized LP Distributions(1) Adjusted EBITDA and CAFD(3) Annual $1,200 MM- 12% - 15% $1,375 MM Growth(2) $2.14 $1.86 $410 MM - $480 MM Q4 2018 Q4 2019E Q4 2023E 12/31/2019 1
Slide 34: NEP offers a superior value proposition
We believe NEP offers a superior value proposition and is well positioned to deliver upon its long-term expectations Investor Total Return Potential ~5% 17% - 20% • Opportunity to earn a total return of roughly 17% - 20% per year through at least 2023 12% - 15% • Diversified portfolio with stable ca
Slide 35: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 35
Slide 36: NEXT@ra
NEXT@ra ENERGY &%
Slide 37: 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 38: 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 39: 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 40: U.S. Federal tax incentives for renewables projects extended into the next decade
U.S. Federal tax incentives for completed renewables projects have been extended into the next decade Extended U.S. Federal Tax Credits Wind Production Solar Investment Tax Credit (PTC) Tax Credit (ITC) Start of Start of Construction COD Wind Construction COD Solar Date Deadline PTC Date Deadline IT
Slide 41: Reconciliation of EPS to Adjusted EPS
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(1) 2017(1) 2018 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.34 $ 3.23 $ 3.27 $ 4.07 $ 3.97 $ 4.74 $
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 cumulative effect of adopting new accounting standards, effect of non-qualifying hedges, the transitional impa
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.) effectiveness of NextEra Energy's risk management tools associated with its hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historical behavior;
Slide 45: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 46: Second Convertible Equity Portfolio Overview
Second Convertible Equity Portfolio Overview(1) Asset MW Technology COD Remaining PPA Term Announced Acquisition Story II 150 Wind 2010 11 Silver State 125 Solar 2016 17 Ashtabula II 120 Wind 2010 21 White Oak 150 Wind 2012 13 Roswell 35 Solar 2016 22 Marshall 31 Solar 2017 23 Total Acquisition 611
Slide 47: Second Convertible Equity Portfolio Financing Summary Terms
Second Convertible Equity Portfolio Financing Summary Terms(1) Key Terms Summary KKR commitment of $900 MM; expected net proceeds prior to offering expenses of approximately $893 MM; NEP to fund the Funding Amount: balance of the $1,020 MM Energy Resources portfolio purchase price and approximately
Slide 48: Low cost of second convertible equity financing allows NEP to retain more cash flow
The low cost of the second convertible equity portfolio financing transaction allows NEP to retain significantly more cash flow relative to alternative financings Net Cash Flow of the Second Transaction vs Equity/Debt 2.0 Transaction 50/50 Equity/Debt(1) $165-$195 ($35-$41) Additional Acquisition ($
Slide 49: NEP's tax shield creates the need for 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 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 51: NEP - PG&E Related Projects
NEP - PG&E Related Projects 12/31/18 Run 12/31/19 Run 12/31/18 Financing PPA Price Rate CAFD Rate CAFD Financing Maturity (1) Project Customer MW COD Term ($/MWh) ($MM) ($MM) Financing Balance Date (2) Genesis Solar PG&E 250 Mar-14 25 $214 $41 - $45 $41 - $45 Genesis Solar LLC $402 2038 Genesis Sola
Slide 52: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($210-$260) ($430-$510) ($30-$35) ($5-$15) $485-$555 ($95-$105) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Potential Tra
Slide 53: 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 54: 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 55: 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 56: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP faces substantial competition primarily from regulated utilities, developers, independent power producers, pension funds and private equity funds for opportunities in North America; The natural gas pipeline industry is