Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q2 2019 Earnings Presentation
43 slides from Nextera Energy's earnings presentation, Jul 24, 2019
Slide 1: Earnings Conference Call Second Quarter 2019
Earnings Conference Call Second Quarter 2019 July 24, 2019
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 delivered strong second quarter results
NextEra Energy delivered strong second quarter results NextEra Energy Second Quarter 2019 Highlights • NEE grew adjusted EPS by ~13% year-over-year • Continued strong execution at FPL – Regulatory capital employed growth of ~8% versus prior-year comparable quarter – All major capital initiatives rem
Slide 4: FPL's earnings per share increased 5 cents from the prior-year comparable quarter
FPL’s earnings per share increased 5 cents from the prior- year comparable quarter Florida Power & Light Results – Second Quarter Net Income EPS ($ MM) $663 $1.32 $1.37 $626 2018 2019 2018 2019 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(1) (Excluding Accumulated Deferred Income Taxes) Second $B Quarter 40.0 FPL – 2018 EPS $1.32 $36.2 35.0 $33.5 Drivers: 30.0 New investmen
Slide 6: Gulf Power contributed adjusted EPS of 12 cents before financing costs
Gulf Power contributed adjusted EPS of 12 cents before accounting for financing costs reflected at Corporate & Other Gulf Power – Second Quarter 2019 Results Highlights • Achieved regulatory ROE of ~9.9% for 12 months ending June 2019 GAAP Adjusted – For 2019, targeting upper half of the allowed ban
Slide 7: Florida's economic growth remains strong
Florida’s economic growth remains strong Florida Economy Florida Unemployment & Labor Participation Rates(1) Florida Consumer Sentiment(2) 12% 63% 110 10% 100 Labor 62% Participation 8% Rate 90 (Right Axis) 61% 6% 80 60% 4% 70 2% 59% 60 0% 58% 50 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-
Slide 8: FPL had continued strong customer growth; Gulf Power customer growth roughly flat
FPL had continued strong customer growth; Gulf Power customer growth was roughly flat due to impacts from Hurricane Michael Customer Characteristics FPL Retail kWh Sales FPL Growth(1,2) (Change vs. prior-year period) (Change vs. prior-year quarter) 99.4 100 Second Quarter 80 Vero Impact # of 60 UKU
Slide 9: Energy Resources' adjusted EPS increased ~12% from the prior-year comparable quarter
Energy Resources’ adjusted EPS increased ~12% from the prior-year comparable quarter Energy Resources Results(1) – Second Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $661 $1.37 $448 $0.93 $396 $0.83 $260 $0.52 2018 2019 2018 2019 2018 2019 2018 2019 1) Attributable to NEE, see
Slide 10: Energy Resources' strong growth partially offset by weak wind resource
Energy Resources’ strong growth was partially offset by weak wind resource at our existing generation assets Energy Resources Second Quarter Adjusted EPS(1) Contribution Drivers $1.00 $0.09 ($0.06) $0.06 ($0.01) $0.93 $0.02 $0.83 $0.80 $0.60 $0.40 $0.20 $0.00 Q2 2018 New Existing Gas Customer Supply
Slide 11: Energy Resources had another strong quarter of origination success
Energy Resources had another strong quarter of origination success Energy Resources Development Program(1) • Renewables backlog increased by 1,869 MW – 94 MW of wind – 744 MW of solar plus 203 MW of battery storage – 828 MW of wind repowering • Executed build-own-transfer agreements for a 99 MW wind
Slide 12: NextEra Energy's adjusted earnings per share increased ~13%
NextEra Energy’s adjusted earnings per share increased ~13% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Second Quarter GAAP 2018 2019 Change FPL $1.32 $1.37 $0.05 Gulf Power - $0.09 $0.09 Energy Resources $0.52 $1.37 $0.85 Corporate and Other ($0.23) ($0.27) ($0.04) Tota
Slide 13: We remain well positioned to continue our strong adjusted EPS growth
We remain well positioned to continue our strong adjusted EPS growth NextEra Energy’s Adjusted Earnings Per Share Expectations • For 2019 through 2021, expect 6% - 8% growth off a 2018 base $10.00 - of $7.70, plus the expected $9.40 - $10.75 accretion from Florida $8.70 - $9.95 acquisitions $9.20 $8
Slide 14: NEP continued solid execution against its growth initiatives
NEP continued solid execution against its growth initiatives NextEra Energy Partners Second Quarter 2019 Highlights • NEP Board declared a quarterly distribution of $0.5025 per common unit, up 15% from prior-year comparable period • Closed on previously announced acquisition of 611 MW renewable port
Slide 15: NEP's second quarter results were in line with expectations
NEP’s second quarter results were in line with expectations after accounting for below normal wind resource NextEra Energy Partners – Second Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $350 $83 ($28) $150 ($6) $26 ($18) ($12) $300 ($3) ($4) $284 $125 ($3) ($7) $116 $114 $254 $250 ($15) Win
Slide 16: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations Adjusted EBITDA(2) CAFD(3) CAFD (Including PG&E) (Excluding PG&E) 12/31/19 Run Rate(1) $1,200 – $1,375 MM $485 – $555 MM $410 – $480 MM Unit Distributions 2019(4) $2.14 annualized rate by year-end 2019 – 2024(5) 12% - 15% average annual g
Slide 17: NEP Portfolio – Embedded CAFD Growth
The future release of cash flow from PG&E-related assets combined with the organic growth opportunities could provide NEP roughly one and a half years of CAFD and DPU growth NEP Portfolio – Embedded CAFD Growth +22% $95 - $105 ($25 - $30) $510 - $580 $15 - $20 ($10 - $15) $25 - $30 $410 - $480 2019
Slide 18: Q&A Session
Qé&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 18
Slide 19: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 19
Slide 20: NextEra Energy
NExTera’ ENERGY @
Slide 21: NextEra Energy's credit metrics remain on track
NextEra Energy’s credit metrics remain on track Credit Metrics A- Downgrade Target S&P Range Threshold 2019 FFO/Debt 13%-23% 21% >21% Debt/EBITDA 3.5x-4.5x <4.5x Baa Downgrade Target Moody’s Range Threshold 2019 CFO Pre-WC/Debt 13%-22% 18% >18% CFO-Div/Debt 9%-17% >12% A Downgrade Target Fitch Midpo
Slide 22: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2019 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.01 - $0.02 • Timing of investment ± $0.02 - $0.03 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.01 - $0
Slide 23: NextEra Energy Resources Projected 2019 Portfolio Financial Information
NextEra Energy Resources Projected 2019 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Adjusted credits included in Maintenance Pre-Tax Cash Remaining EBITDA(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Contract Life (8) Existing
Slide 24: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2018 2019 2ND QTR 3RD QTR 4TH QTR 1ST QTR 2ND QTR Location MW Apr May Jun QTR MW QTR MW QTR YTD MW QTR MW Apr May Jun QTR YTD Midwest 3,637 92% 75% 98% 87% 3,637 94% 3,847 88% 93% 3,847 93% 3,744 96% 87% 88% 91% 92% West 3,243 105% 97% 109% 103% 3,243 104
Slide 25: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2019 – 2020: 2019 – 2020: Burke ND 200 Blythe III CA 125 Emmons-Logan ND 300 New England Various 49 Crowned Ridge I SD 300 Wilmot AZ 100 Sky River CA 62 Blythe IV CA 125 Dodge County MN 170 Quitman GA 150 Borderlands
Slide 26: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019 – 2020: Post – 2022: Montauk NY 5 8.0 Proxima CA 5 4.0 Wilmot AZ 30 4.0 Contracted, not yet announced 203 Rush Springs OK 10 2.0 Total: 208 Minuteman MA 5 2.0 Total: 50 2021 – 2022: Dodge Flat NV 50
Slide 27: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 3/31/19 ($5) Amounts Realized During 2nd Quarter (24) Primary Drivers: Change in Forward Prices (all positions) (93) Interest Rate Hedges ($314) Subtotal – Income Statement (117) Gexa Supply Contra
Slide 28: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 2nd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance (2) Description 3/31/2019 Realized Prices (Loss) 6/30/19 Pretax Amounts Gross Natural gas related positions $ 738 $ (36) $ 43 $ 7
Slide 29: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) Gain / (Loss)(1) Asset / (Liability) Balance Total Description 6/30/19 2019 2020 2021 2022 2023 - 2047 2019 - 2047 Pretax gross amounts Natural gas related positions $ 745 $ 11 $ (71) $ (109) $ (130) $ (446) $ (745) Gas Infrastructure
Slide 30: Reconciliation of GAAP Net Income to Adjusted Earnings (Q2 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended June 30, 2019) Florida Power Gulf Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Power Resources Other Inc. Net Income (Loss) Attributable to NextEra Energ
Slide 31: Reconciliation of GAAP Net Income to Adjusted Earnings (Q2 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended June 30, 2018) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc. $ 6
Slide 32: 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, the effects of non-qualifying hedges and unrealized ga
Slide 33: 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 34: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historica
Slide 35: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 36: Reconciliation of Net Loss to Adjusted EBITDA and CAFD
Reconciliation of Net Loss to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q2 2019 Q2 2018(1) Net income (loss) $ (124) $ 292 Add back: Depreciation and amortization 63 49 Interest expense 207 21 Income taxes (10) (21) Tax credits 119 72 Gains on disposal of Canadian Holding
Slide 37: NEP Wind Production Index
NEP Wind Production Index(1) 2018 2019 2ND QTR 3RD QTR 4TH QTR 1ST QTR 2ND QTR Location MW Apr May Jun QTR MW QTR MW QTR YTD MW QTR MW Apr May Jun QTR YTD Midwest 584 97% 79% 82% 86% 584 87% 793 93% 92% 793 93% 1,213 102% 91% 92% 95% 94% West 908 103% 97% 106% 102% 908 102% 1,104 92% 100% 1,104 81%
Slide 38: NEP's holdco leverage metric target 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 Target S&P(1) Range YE 2019(4) HoldCo Debt/EBITDA 4.0x - 5.0x 4.0x - 5.0x Ba1 Target Moody's(2) Range YE 2019(4) Total Consolidated Debt/EBITDA <7
Slide 39: 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 Unavailable T
Slide 40: 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 41: 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 42: 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 43: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's financial condition and ability to make distributions to its unitholders, as well as its ability to grow distributions in the future, is highly dependent on NEER’s performance of its obligations to return all or a por