Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (February 2019)
52 slides from Nextera Energy's investor presentation, February 2019
Slide 1: February 2019 Investor Presentation
February 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 two strong businesses supported by a common platform
NextEra Energy is comprised of two strong businesses supported by a common platform • ~$83 B market capitalization(1) • ~47 GW in operation(2) • ~$104 B in total assets(3) • The largest electric utility • The world leader in in the United States by electricity generated retail MWh sales from the win
Slide 4: We have established a target to reduce our carbon emissions rate by more than 65% by 2021
We have established a target to reduce our carbon emissions rate by more than 65% by 2021, off a 2001 base 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 Hours of employee training
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 1/25/2019 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $83,258 NextEra Energy 2 $38,185 2 $61,201 3 $34,476 3 $60,1
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. Florida Power & Light • One of the largest U.S. electric utilities • Vertically-integrated, retail rate-regulated • ~5 MM customer accounts • ~24 GW in operation • ~$12 B in operating revenues • ~$53 B in total assets Note: As o
Slide 8: 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 9: FPL focus on low bills, high reliability and outstanding customer service
Florida Power & Light’s focus is on providing customers low bills, high reliability and outstanding customer service FPL – Areas of Focus FPL 1,000-kWh Residential Bill FPL Service Reliability (“SAIDI”)(4) ~$143 $160 ~101 minutes $140 ~$119 $120 ~$109 ~$100 $100 ~58 minutes $80 Good $60 $40 $20 $- F
Slide 10: NextEra Energy completed the acquisition of Gulf Power, Florida City Gas and Stanton and Oleander plants
NextEra Energy completed the acquisition of Gulf Power, Florida City Gas, and the Stanton and Oleander natural gas power plants Transaction Overview • Addition of attractive regulated electric and natural gas franchises are an Tallahassee Tallahassee Tallahassee Tallahassee excellent geographic and
Slide 11: 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 • ~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
Slide 12: 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 13: 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 14: Energy Resources' competitive advantages for continued renewables development success
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 15: 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 16: 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 17: 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 18: Expansion 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 19: NextEra Energy – Strong Credit Quality
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 20: Adjusted Earnings Per Share Expectations
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 21: 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 22: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 23: 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 • ~4,700 MW of renewables – ~4,100 MW wind – ~600 MW so
Slide 24: Since the IPO, NEP has grown distributions by ~148%
Since the IPO, NEP has grown distributions by ~148% and delivered total unitholder return of 90% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices 100% 90% $1.86 80% 60% 49% 43% 40% 20% $0.75 12% 0% Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q3 2016 Q4 2016 Q1 2017
Slide 25: 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 Diversified ~4.7 GW Rating(2) Year-end 2018 17-Yr Portfolio with Renewables >90% Ba1/BB/BB+ Capacity of Project Debt ~1.2x Remaini
Slide 26: 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 27: Acquisitions from Energy Resources as a path to continued growth at NEP
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 ~21 GW 20 15 ~7 GW GW ~10 GW ~4 GW 10 5 0 Renewables MW Sold to NEP MW Placed in Current Backlog Current Portfolio (2) Portfolio after IPO since IPO Se
Slide 28: 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 29: 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) $1,200 MM- Annual $1,375 MM 12% - 15% $1,000 MM - Growth(2) $1,150 MM $2.08-$2.14 $1.86 $410 MM - $360 MM - $480 MM
Slide 30: 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 ~5% 17% - 20% • Opportunity to earn a total return of roughly 17% - 20% per year through at least 2023 12% - 15% • Diversified portfolio wi
Slide 31: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 31
Slide 32: NextEra Energy
NEXT@ra ENERGY &%
Slide 33: 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 34: 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 35: 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 36: U.S. federal tax incentives 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 Tax Solar Investment Credit (PTC) Tax Credit (ITC) Start of Start of Construction COD Wind Construction COD Solar Date Deadline PTC Date Deadline IT
Slide 37: 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(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 38: 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 39: 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 40: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) risk to NextEra Energy Resources of increased operating costs resulting from unfavorable supply costs necessary to provide NextEra Energy Resources' full energy and capacity requirement services; inability or failure by Nex
Slide 41: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 42: NEP's portfolio overview
NEP’s portfolio is comprised of ~4.7 GW of renewable assets plus seven natural gas pipelines with an ~17 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 20 Baldwin Dec-10 ND 102
Slide 43: 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 44: NEP's 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 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 45: NEP - PG&E Related Projects
NEP - PG&E Related Projects 12/31/18 Run 12/31/18 Financing PPA Price Rate CAFD Financing Maturity Project Customer MW COD Term ($/MWh)(1) ($MM) Financing Balance Date Genesis Solar PG&E 250 Mar-14 25 $214 $41 - $45 Genesis Solar LLC $402(2) 2038 Genesis Solar Funding LLC $254 2038 Desert Sunlight 3
Slide 46: Expected Cash Available for Distribution (2018 run rate)
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,100-$1,250 ($15-$25) ($75-$85) $1,000-$1,150 ($200-$250) ($400-$480) ($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 47: Expected Cash Available for Distribution (2019 run rate)
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($265-$315) ($470-$550) ($30-$35) ($5-$15) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service(2
Slide 48: 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 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 federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 50: 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 51: 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 52: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units and preferred 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
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