Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (March 2017)
53 slides from Nextera Energy's investor presentation, March 2017
Slide 1: February/March 2017 Investor Presentation
February/March 2017 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
Slide 3: Table of Contents
Table of Contents • NextEra Energy, Inc. Overview (NYSE: NEE) Slide 4 • Florida Power & Light Slide 9 • NextEra Energy Resources Slide 14 • NextEra Energy Partners, LP (NYSE: NEP) Slide 21 • Financial Review Slide 34 • Appendix Slide 38 3
Slide 4: 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 • $60 B market capitalization(1) • 46 GW in operation(2,3) • $90 B in total assets(3) • Partnership with • One of the largest electric • The world leader in utilities in the nation by electricity generated from retai
Slide 5: Built on a foundation of best-in-class operational excellence and financial strength
Built on a foundation of best-in-class operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2015 Utility & Corporate Benchmarks 2016 NextEra Energy Fuel Mix MWhs(3) Nuclear Wind Industry ~$23 FL Avg ~133 Good 26% 20% FPL ~$14 FPL ~61
Slide 6: 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) $6.19 20% 18% 60% 53% $5.71 16% $5.30 50% $4.97 43% $4.39 $4.57 15% $3.84 $4.05 $4.30 12% 40% $3.49 29% $3.04 10% 30% $2.63 20% 5% 10% 0% 0% '05 '06 '07 '08 '09 '10 '11 '12
Slide 7: Proposed transactions with EFH, TTHC and OMI to own 100% of Oncor
NextEra Energy has announced proposed transactions with EFH, TTHC and OMI that would result in NextEra Energy owning 100% of Oncor Oncor U.S. Bankruptcy Court and PUCT Estimated Timeline January/ September 19, October 31, February February 14, February 21, April 29, 2016 2016 2017 2017 2017 2017 US
Slide 8: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 2/22/2017 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $60,016 NextEra Energy 2 $38,185 2 $55,909 3 $34,476 3 $48,0
Slide 9: 9
9
Slide 10: 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 • ~4.9 MM customer accounts • ~26 GW in operation • $10.9 B in operating revenues • $45.5 B in total assets Note:
Slide 11: 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 Superior Customer Value Delivery customer value proposition • Focus on efficiency and Strong Financial Virtuous Circle Customer best-in-class cost Position Satisfaction performance Constructive • One o
Slide 12: Our value delivery is founded on a low cost position and best-in-class operations
Our value delivery is founded on a low cost position and best- in-class operations Operational Cost Effectiveness(1) $100.00 Good Adjusted Regressed Top Decile $/Retail MWh Log/Log FPL ~$14 $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh (1) FERC Form 1, 2015. Excludes pensions and
Slide 13: FPL's settlement agreement is designed to help deliver continued customer value
FPL’s settlement agreement is designed to help deliver continued outstanding customer value FPL’s Base Rate Case Settlement • Effective January 2017 through December 2020 • Retail base revenue increases according to the following schedule: – $400 MM beginning January 2017 – $211 MM beginning January
Slide 14: NextEra Energy Resources
NEXTeCra’ ENERGY &% RESOURCES _
Slide 15: Energy Resources is a diversified clean energy company
Energy Resources is a diversified clean energy company whose skills and assets are well aligned to drive growth Energy Resources Skills and Capabilities Generation Portfolio(1) • Largest, most successful developer of renewables in North America – Consistent strategy to build, own and operate environ
Slide 16: Energy Resources' growth is driven by its best-in-class development skills
Energy Resources’ growth is driven by its best-in-class development skills NextEra Energy Resources Development Skills Wind and Solar Portfolio(1) 20,000 Customer Wind Relationships 15,000 Engineering/ MW Solar Construction Regulatory 10,000 Management 5,000 0 2002 2004 2006 2008 2010 2012 2014 2016
Slide 17: Outstanding opportunity set for new renewables growth
We continue to have an outstanding opportunity set for new renewables growth Energy Resources Development Program(1) • Delivered ~2.5 GW of wind and solar projects in 2016 • Added ~3.5 GW of renewables projects to backlog over the last year – Includes repowering opportunities for ~1,600 MW of existi
Slide 18: Renewables development opportunities have never been stronger
Energy Resources’ renewables development opportunities have never been stronger Drivers for Renewables • Extension and phase down of U.S. Federal Tax incentives for renewables • Improvements in wind and solar technology and declining cost trends • Evaluating repowering opportunities across our fleet
Slide 19: U.S. Federal tax incentives for renewables 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 Solar Date Deadline PTC Date ITC During 2016
Slide 20: Expanding into the gas pipeline business
We have leveraged our skills and capabilities from gas infrastructure activities to expand into the gas pipeline business Gas Pipeline Assets Sabal Trail and Florida Mountain Valley Pipeline Texas Pipelines(1) Southeast Connection • Energy Resources expects • Energy Resources expects • NEP completed
Slide 21: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 22: We believe NEP is a premier distribution growth company
We believe NEP is a premier distribution growth company NEP Investment Highlights High-Quality Portfolio Financial Strength and Flexibility ~2.8 GW 18-Yr A3 Renewables >90% <2.0x ~1.2x Capacity(3) of Project Debt Remaining Counterparty HoldCo Coverage & Tax Equity Contract Life(1) Credit(1,2) ~4 Bcf
Slide 23: The NEP portfolio is diversified by geography and asset mix
The NEP portfolio is diversified by geography and asset mix NEP Asset Portfolio(1,2) • Wind assets: – 17 projects – ~2,346 MW • Solar assets: – 5 projects – ~442 MW • Pipeline assets: – Seven natural gas pipelines – ~3 Bcf of contracted and ~4 Bcf total capacity (1) Consolidated projects as of Decem
Slide 24: NEP's structure creates tax advantages similar to MLPs
NEP’s structure creates tax advantages similar to MLPs NEP’s Structural Tax Advantages • NEP is not expected to pay meaningful U.S. federal income tax for at least fifteen years – Existing NOLs and NOLs generated through MACRS depreciation of its acquisitions may be used to offset taxable income • N
Slide 25: NEP's tax shield creates the need to employ 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 8%-12% makes
Slide 26: Since the IPO, NEP has delivered total shareholder return of 34%
Since the IPO, NextEra Energy Partners has delivered total shareholder return of 34% Total Shareholder Return NextEra Energy Partners vs. Indices 40% 34% 30% 20% 20% 14% 10% 0% (1) NEP S&P 500 S&P 500 Yieldco Utilities Index Average (2) -10% -20% -18% -30% -40% (1) Reflects total shareholder return
Slide 27: Increasing differentiation among Yieldcos
Over time, we have seen increasing differentiation among Yieldcos Total Shareholder Return(1) NextEra Energy Partners vs. Yieldcos 40% 34% 30% 20% 15% 10% 0% NEP Yieldco A Yieldco B Yieldco C Yieldco D Yieldco E -10% -11% -20% -19% -30% -30% -40% -50% -48% (1) Reflects total shareholder return as of
Slide 28: NEE provides NEP strong visibility into a large portfolio of contracted assets
NEE provides NEP strong visibility into a large portfolio of attractive, long-term contracted assets Strong Sponsor • Renewables backlog – ~13 GW(1) of renewables currently in service – 2.8 – 5.4 GW of contracted U.S. wind and solar projects expected to come in service in 2017 – 2018 – Announced ~1.
Slide 29: Accretive acquisitions have supported significant growth in CAFD and LP distributions
Accretive acquisitions funded by access to both equity and debt have supported significant growth in cash available for distribution (CAFD) and LP distributions NEP Portfolio Run-Rate CAFD(1) Annualized LP Distributions(3) $230-$290 MM $1.41 $85-$90 MM $0.75 (2) IPO 12/31/2016E Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 30: NEP IDR Fee Modification
NextEra Energy and NextEra Energy Partners announced a structural modification to IDR fees NEP IDR Fee Modification • Based on NEP’s fourth quarter 2016 distribution to current LP unitholders at an annualized rate of $1.41(1) per unit, IDR fees are roughly $56 million per year • From this point forw
Slide 31: The modification is centered on value creation
The modification is centered on value creation, and is expected to benefit both NEP and NEE Strategic Rationale of NEP IDR Fee Modification Expected Benefits to NEP Expected Benefits to NEE • More cash available to • Potential increased value in NEP’s LP unitholders NEE’s investment in NEP • Fewer a
Slide 32: Future NEP acquisitions are more accretive to LP unitholders
With the IDR fee modification, future NEP acquisitions are more accretive to LP unitholders NEP IDR Fee Modification Original IDR Fee Waterfall Modified IDR Fee Waterfall Cash Available For Distribution = $4.00/Unit(1) LP IDR Fee LP IDR Fee $1.125 First $1.20/unit $0.075 $1.41 First $1.41/unit $0.00
Slide 33: Hypothetical IDR Fee Calculation Example
Under the new IDR fee structure, incremental IDR fees are only paid on annualized LP distributions/unit greater than $1.41 and based on a single tier of 75% LPs/25% IDRs Hypothetical IDR Fee Calculation Example(1) Example Cash Distributed Cash/Total Unit Distributed Distributable Cash Flow $850 MM $
Slide 34: Financial Review
Financial Review NExTera’ NexTera energy” ENERGY & PARTNERS Z 34
Slide 35: NextEra Energy's Adjusted Earnings Per Share Expectations
NextEra Energy’s Adjusted Earnings Per Share Expectations(1) 2017 $6.35 - $6.85 2018 $6.80 - $7.30 2020 6% - 8% CAGR off a 2016 base (1) See Appendix for definition of Adjusted Earnings expectations 35
Slide 36: NextEra Energy Partners' Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners’ Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/16 Run Rate(2) $670 - $760 MM $230 - $290 MM 12/31/17 Run Rate(3) $875 - $975 MM $310 - $340 MM (1) See Appendix for definition of Adjusted EBITDA and CAFD expectations (2) Reflects calendar year 2017 expect
Slide 37: NEP to grow LP distributions by 12-15% annually through at least 2022
Our current expectations are for 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 annua
Slide 38: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 38
Slide 39: NExTera’
NExTera’ ENERGY @
Slide 40: Contracted Renewables Development Program
Contracted Renewables Development Program(1,2) Wind Location MW COD Solar Location MW COD Breckinridge OK 98 2015 Shafter CA 20 2015 Goshen Ontario 102 2015 Adelanto I & II CA 27 2015 East Durham Ontario 22 2015 McCoy Solar CA 250 2016 Cedar Point JV Ontario 50 2015 Blythe CA 110 2016 Golden Hills C
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 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.34 $ 3.23 $ 3.27 $ 4.07 $ 3.97 $ 4.74 $ 4.59 $ 4.56 $ 4
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 unrealized mark-to-market effect of non-qualifying hedges, net OTTI losses on securities held in NextEra Energ
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.) impact of unavailability or disruption of power transmission or commodity transportation facilities on sale and delivery of power or natural gas; exposure of NextEra Energy to credit and performance risk from customers, hed
Slide 45: Forward Looking Statements
Forward Looking Statements Forward-looking statements also include, but are not limited to, statements about the anticipated benefits of the proposed transactions involving NEE, EFH, TTHC, OMI and Oncor, including future financial or operating results of NEE or Oncor, NEE’s, EFH’s or Oncor’s plans,
Slide 46: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 47: Expected Cash Available for Distribution (12/31/16 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2016 Run Rate CAFD) $750-$840 ($10-$20) ($50-$60) $670-$760 ($250-$270)(2) ($155-$205)(3) $ MM ($25-$30)(4) ($3-$8) $230-$290(5) Project-Level Corporate IDR Fees Adjusted Debt Service Pre-Tax Tax Non-Cash Maintenance Estimated Adjusted Expens
Slide 48: Expected Cash Available for Distribution (12/31/17 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $960-$1,060 ($15-$25) ($60-$70) $875-$975 ($290-$320)(2) ($240-$280)(3) $ MM ($30-$35)(4) ($3-$8) $310-$340(5) Project-Level Corporate IDR Fees Adjusted Debt Service Pre-Tax Tax Non-Cash Maintenance Estimated Adjusted Expe
Slide 49: 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 50: 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 51: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's business is subject to liabilities and operating restrictions arising from environmental, health and safety laws and regulations; Natural gas operations are subject to numerous environmental laws and regulations, comp
Slide 52: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may continue to acquire other sources of clean energy, including, but not limited to, natural gas and nuclear projects, and may expand to include other types of assets including, but not limited to, transmission project
Slide 53: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) available to holders of NEP's common units for actions taken by NEP GP that might otherwise constitute breaches of fiduciary duties; NEP's partnership agreement replaces NEP GP's fiduciary duties to holders of its common un