Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q2 2018 Earnings Presentation
42 slides from Nextera Energy's earnings presentation, Jul 25, 2018
Slide 1: Earnings Conference Call Second Quarter 2018
Earnings Conference Call Second Quarter 2018 July 25, 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 d
Slide 3: Non-GAAP Financial Information
Non-GAAP Financial Information This presentation refers to certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles. Reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP financial measures can be foun
Slide 4: NextEra Energy achieved strong financial results in the second quarter
NextEra Energy achieved strong financial results in the second quarter NextEra Energy Second Quarter 2018 Highlights • NEE grew adjusted EPS by ~13% year-over-year • Continued strong execution at FPL – All major capital initiatives remain on track – Regulatory capital employed growth of ~13% versus
Slide 5: FPL's earnings per share increased 20 cents from the prior-year comparable quarter
FPL’s earnings per share increased 20 cents from the prior- year comparable quarter Florida Power & Light Results – Second Quarter Net Income EPS ($ MM) $626 $1.32 $526 $1.12 2017 2018 2017 2018 5
Slide 6: Continued investment in the business was a primary driver of growth at FPL
Continued investment in the business was a primary driver of growth at FPL Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(2) (Excluding Accumulated Deferred Income Taxes) Second $B Quarter 35.0 $32.3 FPL – 2017 EPS $1.12 30.0 $28.6 Drivers: 25.0 Investments(1)
Slide 7: Florida's economy remains strong and recently passed $1 trillion in GDP
Florida’s economy remains strong and recently passed $1 trillion in GDP Customer Characteristics & Florida Economy Retail kWh Sales Customer Growth(1,2) (Change vs. prior-year quarter) (Change vs. prior-year quarter) Second 100 Quarter 80 Customer Growth & Mix 0.9% UKU Impact 55.8 # of 60 Customers
Slide 8: Energy Resources' adjusted EPS increased ~16% from the prior-year comparable quarter
Energy Resources’ adjusted EPS increased ~16% from the prior-year comparable quarter Energy Resources Results(1) – Second Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $408 $0.86 $351 $0.74 $301 $0.64 $274 $0.55 2017 2018 2017 2018 2017 2018 2017 2018 1) Attributable to NEE, see
Slide 9: Energy Resources' adjusted EPS growth was driven by new and existing investments
Energy Resources’ adjusted EPS growth was driven by contributions from new and existing investments, and lower income tax rates Energy Resources Second Quarter Adjusted EPS(1) Contribution Drivers $0.13 ($0.14) $1.00 $0.04 ($0.05) $0.90 $0.07 $0.86 $0.07 $0.80 $0.74 $0.70 $0.60 $0.07 Renewables $0.0
Slide 10: Energy Resources had another strong quarter of origination success
Energy Resources had another strong quarter of origination success Energy Resources Development Program(1) • 1,082 MW of new renewables projects added to backlog – 99 MW of wind, 21 MW of solar and 15 MW of battery storage for 2018 – 201 MW of wind, 671 MW of solar and 75 MW of storage for post-2018
Slide 11: 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 2017 2018 Change FPL $1.12 $1.32 $0.20 Energy Resources $0.64 $0.55 ($0.09) Corporate and Other ($0.08) ($0.23) ($0.15) Total $1.68 $1.64 ($0.04) A
Slide 12: We remain well positioned to achieve the $7.70 target adjusted EPS for 2018
We remain well positioned to achieve the $7.70 target adjusted EPS for 2018 as well as our long-term financial expectations NextEra Energy’s Adjusted Earnings Per Share Expectations(1) • The Gulf Power, Florida City $9.40 - $8.70 - $9.95 Gas, and two natural gas $8.00 - $9.20 power plant acquisition
Slide 13: NextEra Energy Partners delivered strong financial results in the second quarter
NextEra Energy Partners delivered strong financial results in the second quarter NextEra Energy Partners Second Quarter 2018 Highlights • Adjusted EBITDA and CAFD growth of 29% and 37%, respectively – Reflects contributions from new asset additions in 2017 – Outstanding operating performance of the
Slide 14: NEP delivered strong second quarter results driven by new projects
NEP delivered strong second quarter results driven primarily by contributions from new projects NextEra Energy Partners – Second Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $300 $120 $9 $115 $4 ($3) ($3) $21 $7 $5 $253 $250 $48 $100 $84 $200 $196 $80 $150 $60 $100 $40 $50 $20 $0 $0 Q2 2017
Slide 15: 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 16: Q&A Session
Q&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 16
Slide 17: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 17
Slide 18: NextEra Energy
NExTera’ ENERGY @
Slide 19: 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 20: 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) ± $0.01 - $0.02 • Timing of investment ± $0.01 - $0.02 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.01 - $0
Slide 21: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2017 2018 2ND QTR 3RD QTR 4TH QTR 1ST QTR 2ND QTR Location MW Apr May Jun QTR MW QTR MW QTR YTD MW QTR MW Apr May Jun QTR YTD Midwest 3,039 96% 102% 117% 104% 3,039 83% 3,189 107% 100% 3,637 101% 3,637 91% 74% 97% 87% 94% West 3,302 99% 97% 92% 96% 3,302
Slide 22: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2017: 2017: Oliver III ND 99 Whitney Point CA 20 Golden Hills North CA 46 Marshall MN 62 Bluff Point IN 120 Westside CA 20 Cottonwood NE 90 Distributed Generation Various 97 TOTAL 2017 Wind: 355 TOTAL 2017 Solar: 199
Slide 23: Energy Storage Development Program
Energy Storage Development Program Project Location MW Duration Project Location MW Duration 2017: 2019 – 2020: Blue Summit TX 30 0.5 Valencia CA 10 4.0 Total: 30 0.5 Wilmot AZ 30 4.0 Total: 40 4.0 2018: Pinal AZ 10 4.0 Post – 2020: Parry ON 2 4.0 Dodge Flat NV 50 4.0 Elmira ON 2 4.0 Fish Springs NV
Slide 24: NextEra Energy Resources Projected 2018 Portfolio Financial Information
NextEra Energy Resources Projected 2018 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Adjusted credits included in Maintenance Pre-Tax Cash Remaining EBITDA(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Contract Life (8) NEER Exi
Slide 25: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) 1) Includes NextEra Energy’s share of contracts at consolidated projects and equity method investees 2) Removal of NEER’s share of NEP’s disposal of its Canadian projects 25
Slide 26: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 2nd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance 1/1/18 Amounts Forward NQH Gain / Balance (3) (4) Description 3/31/18 Adjustments Realized Prices (Loss) Other 6/30/18 Pretax Amounts Gross Natural gas related posi
Slide 27: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) Gain / (Loss)(1) Asset / (Liability) Balance Total Description 6/30/18 2018 2019 2020 2021 2022 - 2047 2018 - 2047 Pretax gross amounts Natural gas related positions $ 793 $ (85) $ (92) $ (81) $ (101) $ (434) $ (793) Gas Infrastructure
Slide 28: Reconciliation of Adjusted Earnings to GAAP Net Income (Q2 2018)
Reconciliation of Adjusted Earnings to GAAP Net Income 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 29: Reconciliation of Adjusted Earnings to GAAP Net Income (Q2 2017)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended June 30, 2017) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc. $ 5
Slide 30: 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 31: 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 32: 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 33: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 34: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q2 2018 Net Income $ 296 Add back: Depreciation and amortization 49 Interest expense 21 Income taxes (21) Tax credits 72 Gains on disposal of Canadian Holdings and related foreign currency hedge (16
Slide 35: NEP Wind Production Index
NEP Wind Production Index(1)(2) 2017 2018 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 West 909 101% 88% 90% 92% 909 85% 909 102% 93% 908 104% 908 102% 96% 105% 101% 102% Texas 250 99% 88% 86% 91% 250 82% 500 93% 89% 500 102% 500
Slide 36: NEP's holdco leverage to project distributions metric target of 4.0x – 5.0x
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) (5) Moody's Range 2017 YE 2
Slide 37: 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 38: 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 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 federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 40: 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 41: 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 42: 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