Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q1 2018 Earnings Presentation
49 slides from Nextera Energy's earnings presentation, Apr 24, 2018
Slide 1: Earnings Conference Call First Quarter 2018
Earnings Conference Call First Quarter 2018 April 24, 2018
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 delivered strong first quarter results
NextEra Energy delivered strong first quarter results First Quarter 2018 Highlights • NEE grew adjusted EPS by almost 11% versus the prior-year comparable quarter • FPL: – Achieved regulatory capital employed growth of ~12.9% year-over-year – Commissioned total of ~600 MW of solar under SoBRA and th
Slide 4: FPL's EPS increased 7 cents from the prior-year comparable quarter
FPL’s EPS increased 7 cents from the prior-year comparable quarter Florida Power & Light Results – First Quarter Net Income EPS ($ MM) $484 $1.02 $445 $0.95 2017 2018 2017 2018 4
Slide 5: Continued investment in the business was the primary driver of growth at FPL
Continued investment in the business was the primary driver of growth at FPL Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(2) (Excluding Accumulated Deferred Income Taxes) First $B Quarter 35.0 $31.6 FPL – 2017 EPS $0.95 30.0 $28.0 Drivers: 25.0 Investments(1)
Slide 6: FPL has continued to make solid progress on its major capital initiatives
FPL has continued to make solid progress on its major capital initiatives Florida Power & Light Development Highlights • First ~600 MW of solar projects developed under SoBRA placed in service during first quarter of 2018 • Deployed first two projects under 50 MW Battery Storage Pilot Program – Incl
Slide 7: Florida's economy remains healthy and is among the strongest in the nation
Florida’s economy remains healthy and is among the strongest in the nation Customer Characteristics & Florida Economy Retail kWh Sales Customer Growth(1,2) (Change vs. prior-year quarter) (Change vs. prior-year quarter) First 100 Quarter 80 Customer Growth & Mix 0.9% UKU Impact 52.9 # of 60 Customer
Slide 8: Energy Resources' adjusted EPS increased ~7% from the prior-year comparable quarter
Energy Resources’ adjusted EPS increased ~7% from the prior-year comparable quarter Energy Resources Results(1) – First Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $3,926 $8.26 $357 $386 $0.81 $0.76 $476 $1.01 2017 2018 2017 2018 2017 2018 2017 2018 1) Attributable to NEE, see
Slide 9: Energy Resources' adjusted EPS growth was driven primarily by lower income tax rates
Energy Resources’ adjusted EPS growth was driven primarily by lower income tax rates and contribution from existing assets Energy Resources First Quarter Adjusted EPS(1) Contribution Drivers $1.00 $0.90 $0.06 ($0.17) $0.12 ($0.02) $0.81 $0.80 $0.76 $0.06 $0.70 $0.60 $0.50 ($0.17) Renewables $0.00 Ga
Slide 10: Energy Resources had one of its best quarters for new renewables origination
Energy Resources had one of its best quarters for new renewables origination Energy Resources Development Program(1) • 1,001 MW of new renewables projects added to backlog – Includes 247 MW of wind and 34 MW of solar for 2018 and 420 MW of wind and 300 MW of solar for post-2018 • Current 2017 – 2020
Slide 11: NextEra Energy's adjusted earnings per share increased 10.9%
NextEra Energy’s adjusted earnings per share increased 10.9% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – First Quarter GAAP 2017 2018 Change FPL $0.95 $1.02 $0.07 Energy Resources $1.01 $8.26 $7.25 Corporate and Other $1.41 $0.04 ($1.37) Total $3.37 $9.32 $5.95 Adjusted
Slide 12: NextEra Energy Adjusted Earnings Per Share Expectations
NextEra Energy Adjusted Earnings Per Share Expectations(1) 2018 $7.45 - $7.95 2019 $8.00 - $8.50 2020 $8.55 - $9.05 2021 $9.20 - $9.75 Long-Term Growth 6% - 8% CAGR through 2021 off Rate $7.70 2018 midpoint 1) See Appendix for definition of Adjusted Earnings expectations 12
Slide 13: NextEra Energy Partners delivered strong performance in the first quarter
NextEra Energy Partners delivered strong performance in the first quarter NextEra Energy Partners First Quarter 2018 Highlights • Strong contributions from portfolio acquisitions drove adjusted EBITDA and CAFD growth of 52% and 138%, respectively – Includes ~$30 MM benefit from acceleration of a not
Slide 14: NEP – Canadian Portfolio Sale
NEP has continued to position itself for sustained long-term growth NEP – Canadian Portfolio Sale • Announced sale of 396 MW of Canadian wind and solar portfolio • Total consideration of ~$582 MM(1) USD, plus ~$689 MM USD in existing debt • Represents 10-year average CAFD yield of 6.6%(1) • Expect t
Slide 15: NEP delivered strong first quarter results driven primarily by recent acquisitions
NEP delivered strong first quarter results driven primarily by recent acquisitions NextEra Energy Partners – First Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $300 $140 $10 ($3) $2 $258 $30 $120 $15 ($3) ($19) $250 $49 $30 $100 $95 $200 $170 $80 $32 $150 $60 $100 $40 $40 $50 $20 $0 $0 Q1 2
Slide 16: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/18 Run Rate(2) $1,000 – $1,150 MM $360 – $400 MM Unit Distributions 2018(3) $1.81 - $1.86 annualized rate by year-end 2017 – 2023(4) 12% - 15% average annual growth 1) See Appendix for definition of Adjusted
Slide 17: Q&A Session
Q&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 17
Slide 18: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 18
Slide 19: NExTera’
NExTera’ ENERGY @
Slide 20: Accumulated deferred income taxes are expected to decrease over time
Accumulated deferred income taxes are expected to decrease over time as FPL is not permitted to take bonus depreciation on future investments Florida Power & Light Regulatory Capital Employed(1) $B $40.0 $36.4 ($8.4) $35.0 $30.0 $28.0 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 (2) Q1 2017 Remove Accumulated
Slide 21: NEP no longer consolidated by NextEra Energy effective January 2018
Due to the enhanced governance rights for LP unitholders, effective January 2018 NEP is no longer consolidated by NextEra Energy Practical Summary of Deconsolidation Accounting GAAP Adjusted Earnings • NEP’s balance sheet removed • No impact to adjusted earnings Equity from NEE’s and replaced with M
Slide 22: NextEra Energy's adjusted earnings are not materially impacted by NEP deconsolidation
NextEra Energy’s adjusted earnings are not materially impacted by NEP deconsolidation NextEra Energy’s Adjusted Earnings NEP Deconsolidation Impact - Q1 2018 ($ MM) With NEP Consolidated With NEP Deconsolidated Net income attributable to NEE $1,445 Net income attributable to NEE(1) $4,428 Other Adju
Slide 23: New accounting standards and tax reform impacts on adjusted earnings
In January 2018, NextEra Energy adopted new accounting standards and recorded tax reform-related impacts to tax equity arrangements, which impacts adjusted earnings Practical Summary of New Accounting Standards and Tax Reform Impacts GAAP Adjusted Earnings • Historically unrealized gains were • Unre
Slide 24: NEE's Balance Sheet Impacts due to Accounting Changes and Deconsolidation
NEE’s Balance Sheet Impacts due to Accounting Changes and Deconsolidation ($ MM) New Tax Reform Accounting NEP Impact on Tax As Reported Standards Deconsolidation Equity Recast 12/31/2017 1/1/2018 1/1/2018 1/1/2018 1/1/2018 Assets Total PPE 72,416 (96) (6,174) 66,146 (9) Investment in NEP(1) - 4,433
Slide 25: NextEra Energy's Adjusted Earnings - Q1 2018
NextEra Energy’s adjusted earnings now captures NEP investment gains related to deconsolidation and tax reform related impacts on tax equity NextEra Energy’s Adjusted Earnings - Q1 2018 ($ MM) Net income attributable to NEE(1) $4,428 Other Adjustments (NQH, etc.) (66) NEP Investment gains impact(2):
Slide 26: 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 2017(1) 2018(2) FFO/Debt 23%-35% 23% 26% / 29% 28% Debt/EBITDA 2.5x-3.5x 3.0x 3.0x Baa Downgrade Actual Target Moody’s Range Threshold 2017 2018(2) CFO Pre-WC/Debt 13%-22% 20% 22% 23% CFO-Di
Slide 27: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2018 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.02 - $0.03 • Timing of investment ± $0.02 - $0.03 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.02 - $0
Slide 28: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2017 2018 1ST QTR 2ND QTR 3RD QTR 4TH QTR 1ST QTR Location MW Jan Feb Mar QTR MW QTR MW QTR MW QTR YTD MW Jan Feb Mar QTR Midwest 3,039 90% 112% 104% 101% 3,039 104% 3,039 83% 3,189 107% 100% 3,637 108% 101% 93% 101% West 3,202 88% 106% 95% 96% 3,302 96%
Slide 29: Contracted Renewables Development Program
Contracted Renewables Development Program(1) Wind Location MW Solar Location MW 2017: 2017: Oliver III ND 99 Whitney Point CA 20 Golden Hills North CA 46 Marshall MN 62 Bluff Point IN 120 Westside CA 20 Cottonwood NE 90 Distributed Generation Various 97 TOTAL 2017 Wind: 355 TOTAL 2017 Solar: 199 201
Slide 30: NextEra Energy Resources Projected 2018 Portfolio Financial Information
NextEra Energy Resources Projected 2018 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Remaining Adjusted credits included in Debt Maintenance Pre-Tax Cash Contract EBITDA(2) adjusted EBITDA(3) Service (4) Capital(5) Other(6) Flows(7) Life (8) NEER Exi
Slide 31: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) 1) Includes NextEra Energy’s share of contracts at consolidated projects and equity method investees 2) After-tax impact of modified retrospective application of new revenue standard 31
Slide 32: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 1st Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance 1/1/18 Amounts Forward NQH Gain / Balance (3) Description 12/31/17 Adjustments Realized Prices (Loss) 3/31/18 Pretax gross amounts Natural Gas related positions $ 7
Slide 33: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) Gain / (Loss)(1) Asset / (Liability) Balance Total Description 3/31/18 2018 2019 2020 2021 2022 - 2047 2018 - 2047 Pretax gross amounts Natural gas related positions $ 829 $ (158) $ (100) $ (87) $ (93) $ (391) $ (829) Gas Infrastructur
Slide 34: Reconciliation of Adjusted Earnings to GAAP Net Income (Q1 2018)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2018) Florida Pow er Energy Corporate & NextEra Energy, (m illions, except per share am ounts) & Light Resources Other Inc. Net Incom e (Loss) Attributable to NextEra Energy, Inc
Slide 35: Reconciliation of Adjusted Earnings to GAAP Net Income (Q1 2017)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2017) Florida Power Energy Corporate & (millions, except per share amounts) & Light Resources Other NextEra Energy, Inc. Net Income Attributable to NextEra Energy, Inc. $ 445 $ 4
Slide 36: 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, the transitional impacts of tax reform, NEP investment gains, as well as unr
Slide 37: 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 38: 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 39: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 40: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q1 2018 Net loss $ (21) Add back: Depreciation and amortization 53 Interest expense 103 Income taxes 19 Tax credits 70 Equity in earnings of non-economic ownership interests (6) Payment of Jericho r
Slide 41: NEP Wind Production Index
NEP Wind Production Index(1) A 1% change in the wind production index equates to roughly $6 - $8 MM of adjusted EBITDA for balance of 2018 1) Represents a measure of the actual wind speeds available for energy production for the stated period relative to long-term average wind speeds; the numerator
Slide 42: NEP's holdco leverage to project distributions metric target is consistent with BB 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) S&P Range 2017 YE 2018(5) Holdco Debt/EBITDA 4.0x - 5.0x 3.8x 4.0x - 5.0x Ba1 Actual Target (2) (4) (5) Moody's Range 2017
Slide 43: NEP Debt Amortization Schedule
NEP Debt Amortization Schedule(1) Quarterly 2018 Fiscal Year Maturity Total Date Q2 2018 Q3 2018 Q4 2018 2018 2019 2020 2021 2022 Thereafter NEE Operating Partners LP 2024 $ - $ - $ - $ - $ - $ - $ - $ - $ 550 $ 550 NEE Operating Partners LP 2027 550 550 NET Holdings Mgt LLC 2020 - - - - - 350 - - -
Slide 44: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,100-$1,250 ($20-$30) ($75-$85) $1,000-$1,150 ($240-$320) ($330-$410) ($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 45: 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 46: 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 47: 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 48: 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 49: 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