Xplr Infrastructure, Lp · NYSE:XIFR
Xplr Infrastructure, Lp — NextEra Energy Partners — Investor Presentation (August 2017)
37 slides from Xplr Infrastructure, Lp's investor presentation, August 2017
Slide 1: NextEra Energy Partners, LP August 2017 Investor Presentation
NextEra Energy Partners, LP August 2017 Investor Presentation 1
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 Partners is a best-in-class diversified clean energy growth company
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 • ~3,000 MW of renewables – ~2,600 MW wind – ~400 MW so
Slide 4: NEP has grown distributions by more than 100% since the IPO
NEP has grown distributions by more than 100% since the IPO Annualized LP Distributions(1) $1.52 $0.75 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 4 1) Annualized basis; refer to distributions payable on the NextEra Energy Partners Investor Relatio
Slide 5: Since the IPO, NextEra Energy Partners has delivered total unitholder return of 82%
Since the IPO, NextEra Energy Partners has delivered total unitholder return of 82% Total Unitholder Return NextEra Energy Partners vs. Indices 100% 90% 82% 80% 70% 60% 50% 40% 35% 34% 30% 20% Yieldco 10% (1) Average(2) 0% -10% (7%) (1) NEP S&P 500 S&P 500 YieldCo (2) Utilities Index Average 1) Refl
Slide 6: 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 Financial Strength and Flexibility Issuer Credit ~3 GW Rating(3) Year-end 2017E 18-Yr A3 Renewables >90% Ba1/BB/BB+ Remaining Counterparty Capacity of Project Debt ~1.2x & Tax Equ
Slide 7: We believe NEP's portfolio characteristics are best-in-class
We believe NEP’s portfolio characteristics are best-in-class Portfolio Overview(1) Asset Type Mix Project Concentration (% of CAFD) (Top 5 Assets % of CAFD) 26% 84% 56% 19% 47% 44% 55% IPO 6/30/2017 IPO 6/30/2017 Wind Solar Pipelines Counterparty Average Credit Rating & Diversity(2,3) Average Contra
Slide 8: NEP's structure creates tax advantages similar to MLPs
NEP’s structure creates tax advantages similar to MLPs Structural Tax Advantages Federal Income Earnings & Profits C-Corp for Tax Tax Shield Tax Shield Purposes • Driven by existing and • NEP distributions are • Investors receive a future NOLs treated as “return of 1099-DIV as opposed generated prim
Slide 9: 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 10: Wind expected to be very competitive into the next decade
With continued technology improvements and cost declines, wind is expected to be very competitive into the next decade Wind Technology Levelized Cost of Net Capacity Factor(1) Electricity from Wind (Including Production Tax Credits) $/MWh 65% $70 $55-$65 60% $60 55% $50 50% $40 $36-$42 45% $30 $21-$
Slide 11: Technology improvements and cost declines further improve solar economics
Additional technology improvements and cost declines are also expected to further improve solar economics Solar Technology PV Installed Cost(1) Levelized Cost of and Module Efficiency(2) Electricity from Solar (Including Investment Tax Credits) $/Wdc $/MWh $4.00 $3.62 22.0% $160 $140-$150 $3.50 $140
Slide 12: Demand for both wind and solar energy is expected to be robust through the end of the decade
Demand for both wind and solar energy is expected to be robust through the end of the decade Industry Estimates of Wind & Solar Market Potential 2017 - 2020(1) Wind Additions Solar Additions 45 45 40 40 37 Avg: 36 GW 40 35 35 32 35 30 30 25 26 GW 25 GW 25 24 Avg: 22 GW 20 20 15 15 13 10 10 5 5 0 0 B
Slide 13: Estimated Costs of Generation Resources Post-2020
The all-in cost of wind and solar will continue to compete with existing generation resources as tax credits phase down Estimated Costs of Generation Resources Post – 2020(1) (cents/kWh) 4 - 5¢ w/ storage adder 4 - 5¢ 3.5 - 5¢ 3 - 4¢ w/ storage adder 3 - 4¢ 3 - 4¢ 2 - 3¢ (2) (2) New Wind New Solar N
Slide 14: Acquisitions, organic growth and third party M&A provide clear visibility to future growth
Acquisitions from Energy Resources, organic growth and third party M&A all provide NEP with clear visibility to future growth Growth Opportunities Potential Acquisition of Potential Organic Clean Energy Potential for 3rd Prospects for Assets at Energy Party Texas Pipelines Resources, Acquisitions an
Slide 15: Energy Resources' portfolio could provide a path to 12%-15% growth per year through 2022
Existing Energy Resources’ portfolio alone could provide one potential path to 12% - 15% growth per year through 2022 Energy Resources’ Renewable Portfolio Since NEP’s IPO GW 14 ~5 GW ~13 GW 12 ~10 GW ~2 GW 10 8 6 4 2 - (1) Renewables Portfolio MW Sold to NEP MW Placed Current Portfolio after IPO si
Slide 16: NEP is exploring organic growth opportunities in pipeline expansion and repowerings
NEP is exploring organic growth opportunities in the form of potential pipeline expansion and repowerings Organic Growth Opportunities Texas Pipelines Expansion ($MM) • NEP is exploring expansion $190-$210 growth opportunities at the TX pipelines – $300 MM - $350 MM investment $145-$155 at ~6x Adjus
Slide 17: There is a large addressable renewables market in which NEP can compete
There is a large addressable renewables market in which NEP can compete Third-Party Opportunities Potential Addressable Market (1) Yieldcos & MLP Trading Yields(2,3) ~$1,570 B NEP trades at a competitive yield Total Midstream Market compared to other Yieldcos and high growth MLPs ~31% ~$480 B MLPs ~
Slide 18: Governance changes at NEP to enhance LP unitholder rights
We have implemented certain governance changes at NEP in order to enhance LP unitholder rights Enhancing Unitholder Governance Rights Prior Structure New Structure • BOD at NEP GP • New BOD at NEP LP Board of • Three Directors appointed by GP (NEE) Directors • NEE appointed all Directors • • Four Di
Slide 19: Financing optimization expected to minimize the need for common equity
NEP’s ongoing financing optimization is expected to minimize the need for common equity Optimizing The Capital Structure Investor IDR Fee Low double-digit Investor Demand Modification ROEs on acquisitions Demand Access Access to Preferred financing Dividend Alternative to Low Low Cost Financing supp
Slide 20: NEP's credit ratings increase financing flexibility and debt capacity
NEP’s credit ratings increase financing flexibility and debt capacity due to greater market access Corporate Credit Rating and Debt Capacity • NEP corporate credit ratings: New Opportunities High-Yield Term Loan B Debt Moody’s S&P Fitch Convertible Debt Revolving Credit Ba1 BB BB+ Facility Stable St
Slide 21: NEP is on-track to meet its 2017 run-rate Adjusted EBITDA and CAFD expectations
NEP is on-track to meet its 2017 run-rate Adjusted EBITDA and CAFD expectations Adjusted EBITDA and CAFD Expectations Adj. EBITDA CAFD ($MM) ($MM) $875-$975 $310-$340 $670-$760 $230-$290 2016 YE 2017 YE 2016 YE 2017 YE Run-Rate (1) Run-Rate (2) Run-Rate (1) Run-Rate (2) 1) Reflects calendar year 201
Slide 22: Long-term distribution per unit growth expectations
Looking forward, we expect NEP to grow LP distributions by 12% – 15% annually through at least 2022 NextEra Energy Partners’ Long-Term Distribution per Unit Growth Expectations(1) Annual 12%-15% Growth(2) $1.58-$1.62 $1.41 Q4 2016 Q4 2017E Q4 2022E 1) Represents expected fourth quarter annualized di
Slide 23: NEP offers a superior value proposition and total return potential
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 24: Appendix
24 Appendix NexTera energy” PARTNERS Z
Slide 25: NEP's portfolio is comprised of 3 GW of renewable assets plus seven natural gas pipelines
NEP’s portfolio is comprised of 3 GW of renewable assets plus seven natural gas pipelines with a ~18 year weighted average remaining contract life Portfolio Overview Project COD Location Net MW Technology Counterparty Credit PPA Life Ashtabula III Dec-10 ND 62 Wind N/A 18 Baldwin Dec-10 ND 102 Wind
Slide 26: U.S. Federal tax incentives for renewables projects extended into the next decade
U.S. Federal tax incentives for 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 Solar Date Deadline PTC Date ITC During 2016 12/31/202
Slide 27: 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 28: IDR Fee Modification
By reducing the amount of top-tier IDRs by 50%, we expect future acquisitions to be more accretive to LP distributions IDR Fee Modification LP ROEs are expected to increase from the high single-digits to the low double-digits on future acquisitions 28 1) Illustrative for new acquisition providing $4
Slide 29: NEP agreement to issue $550 MM of convertible preferred securities
NEP has reached an agreement to issue $550 MM of convertible preferred securities Convertible Preferred Offering(1) • Completed with a group of Coupon at Issuance for private investors Comparable Transactions(2) • Provides a low cash cost of 10.0% 10.75% 9.5% funds that is comparable to 8.5% 8.5% Ho
Slide 30: Credit Metrics
NEP’s holdco leverage to project distributions metric target of 4.0x – 5.0x, at a P90 resource, 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) M
Slide 31: Expected Cash Available for Distribution
NEP is on-track to meet its 2017 run-rate Adjusted EBITDA and CAFD expectations Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $960-$1,060 ($15-$25) ($60-$70) $875-$975 ($290-$320) ($240-$280) $ MM ($30-$35) ($3-$8) $310-$340 (2) (3) (4) (5) 1) Project-Level Adjusted E
Slide 32: Adjusted EBITDA to CAFD
Similar to MLPs, distributions to NEP’s LP unitholders are paid from cash available for distribution (CAFD), which is derived from the following calculation Adjusted EBITDA to CAFD(1) Adjusted EBITDA Includes pre-tax PTCs earned by NEP and PTCs allocated to tax equity investors - Debt Service Amorti
Slide 33: Definitional information
Definitional information NextEra Energy Partners, LP. Adjusted EBITDA and CAFD Expectations This presentation refers to adjusted EBITDA, CAFD, and project-level CAFD expectations. NEP’s adjusted EBITDA expectations represent projected (a) revenue less (b) fuel expense, less (c) project operating exp
Slide 34: 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 35: 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 36: 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 37: 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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