Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (May 2015)
70 slides from Nextera Energy's investor presentation, May 2015
Slide 1: May/June 2015 Investor Presentation
May/June 2015 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 12 • NextEra Energy Resources Slide 30 • NextEra Energy Partners, LP (NYSE: NEP) Slide 42 • Financial Review Slide 48 • Appendix Slide 52 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 • $44 B market capitalization(1) • 44,925 MW in operation(2) • $75 B in total assets • Strategic partnership with • One of the largest • U.S. leader in U.S. electric utilities renewable generation Engineering & Const
Slide 5: NextEra Energy is well-positioned for future growth
NextEra Energy is well-positioned for future growth NextEra Energy – Areas of Focus • At FPL: – Consistently deliver superior customer value through world class daily operations (low bills, high reliability, great customer service) – Invest capital in ways that drive out cost and improve reliability
Slide 6: NEP forms an excellent complement to NextEra Energy
NEP forms an excellent complement to NextEra Energy NextEra Energy – Partnership with NEP • Best in class Yieldco vehicle through creation of – Strong sponsor with proven development track record – Extensive potential drop down visibility – Well-aligned incentives, using proven MLP-like structure wi
Slide 7: Built on a foundation of operational excellence and financial strength, and focused on clean generation
Built on a foundation of operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2013 Utility & Corporate Benchmarks 2014 NextEra Energy Fuel Mix MWhs(4) Good Industry 6.9% Nuclear Wind Good 26% 17% Industry ~$24 FL Avg ~97 Natural Gas C
Slide 8: 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) $5.30 35% 100% 93% 4.97 4.39 4.57 30% 28% 29% 4.30 80% 75% 3.84 4.05 25% 3.49 3.04 60% 2.49 2.63 20% 48% 14% 15% 40% 10% 20% 5% 0% 0% '04 '05 '06 '07 '08 '09 '10 '11 '12 '1
Slide 9: A key part of our strategy has been to build around our core strengths
A key part of our strategy has been to build around our core strengths, taking advantage of market opportunities Growth Strategy Core Strengths Operational Excellence + Financial Strength + Visible Growth Opportunities Skills 2014 FPL Gas Reserves 2013 Gas Pipelines + 2012 Distributed Solar Scale 20
Slide 10: Our growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization As of 6/1/2001 ($ MM) As of 12/31/2014 ($ MM) Market Market Rank Company Rank Company Cap Cap 1 Company A $38,574 1 Company D $59,087 2 Company B $38,18
Slide 11: NEE's strong financial performance has continued in 2015
NEE's strong financial performance has continued in 2015 with first quarter adjusted EPS growth of approximately 12% over first quarter 2014 First Quarter 2015 Highlights(1) • NEE achieved adjusted EPS growth of 12% over the prior-year comparable quarter – Energy Resources adjusted EPS grew 21% – FP
Slide 12: 12
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Slide 13: 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(1) • One of the largest U.S. electric utilities • Vertically integrated, retail rate-regulated • 4.8 MM customer accounts • 25,045 MW in operation • $11.4 B in operating revenues(1) • $40 B in total assets
Slide 14: Florida's economy is growing at a healthy pace
Florida’s economy is growing at a healthy pace Florida Economy Florida Unemployment(1) Florida Building Permits(2) 12% 12,000 10% 10,000 Mar-15 8% 8,000 Mar-15 6% 6,000 4% 4,000 2% 2,000 0% 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan
Slide 15: 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 Satisfaction customer value proposition • Focus on efficiency and Superior Customer Constructive best-in-class cost Value Virtuous Circle Regulatory Environment performance Delivery • One of t
Slide 16: Our value delivery is founded on a low cost position
Our value delivery is founded on a low cost position Operational Cost Effectiveness(1) $100.00 Good Adjusted Regressed Top Decile $/Retail MWh FPL 2013 = $15.19/MWh Log/Log 2014 = $14.84/MWh $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh (1) FERC Form 1, 2013. Excludes pensions and
Slide 17: FPL's typical residential bills are below Florida and national averages
FPL’s strategy continues to result in typical residential bills below both Florida and national averages Typical Customer Bill(1) ~$137 ~$122 ~$101 ~$97 FPL (2) FPL FL IOU National (3) 2014 2015 Average Average (5) (4) 2015 (1) Rates based on a typical 1,000 kWh residential bill (2) FPL 2014 annual
Slide 18: We continue to have a great set of opportunities ahead of us
We continue to have a great set of opportunities ahead of us Overview of Opportunities • We are focused on the underpinnings of our successful strategy: – Deploying incremental capital and focusing on O&M savings – Investments that benefit both investors and customers • Growth opportunities come fro
Slide 19: Growth capital and long term infrastructure improvements to improve reliability
We have focused on growth capital and long term infrastructure improvements that will improve system reliability Transmission and Distribution Infrastructure Investments • From 2015-2018 FPL expects Potential Impact to invest $3-4 B in T&D of Reliability Investments(1) infrastructure investments Ser
Slide 20: Our major generation initiatives are on track
Our major generation initiatives are on track Generation Modernization Projects • Produce a number of customer benefits: – 33% more fuel-efficient Cape Canaveral Next Generation – Expected to save customers more Clean Energy Center – opened 2013 than $1 B in fuel costs – Consistent with clean energy
Slide 21: Upgrading existing gas turbines with more efficient peakers
We are upgrading our existing gas turbines “peakers” with more efficient, advanced combustion turbines Generation Upgrades • FPL currently has a fleet of 48 gas turbines or “peakers” to help ensure reliability – Original GTs went into service in the early 1970s with heat rates of over 13,000 Btu/kWh
Slide 22: Upgrading 7FA combustion turbine compressors to the .05 design
We are upgrading 26 7FA combustion turbine compressors to the newest .05 design .05 Compressor Upgrades • Expected to reduce fuel cost for our customers by $600 MM over the life of the plants • Improve emissions profile Inlet Air Exhaust Gas • Estimated capital investment of $300 to $350 MM • Upgrad
Slide 23: Acquisition of the Cedar Bay facility
FPL has the opportunity to create customer savings through an acquisition of the Cedar Bay facility Cedar Bay • The Cedar Bay cogeneration facility is a 250 MW coal-fired power plant in Jacksonville, FL • FPL has a contract with Cedar Bay for capacity and energy through 2024 • Signed purchase and sa
Slide 24: 2019 Combined Cycle Unit
Longer term, our state continues to grow and will require more infrastructure 2019 Combined Cycle Unit • FPL issued RFP in March 2015 for 2019 capacity need • Self-build option, if selected, is expected to be one of the most fuel efficient combined cycle plants built to date • Self-build option expe
Slide 25: Natural Gas Supply Project
We continue to look for opportunities to drive out variable cost and improve customer economics Natural Gas Supply Project • Investments in gas production should drive significant benefits for our customers – Owning gas production provides a long-term hedge against potential price volatility • Woodf
Slide 26: Three new large scale solar projects
We recently announced three new large scale solar projects that are cost effective for customers Solar Investment • Combined ~223 MW – $400 - $420 MM • Cost effective for customers: – Further reduces fuel cost – Further improves emissions profile – Reduce bill variability • Leveraging existing infra
Slide 27: Cost effective renewables: utility scale vs. distributed solar
We are focused on identifying opportunities to deliver cost effective renewables for our customers Utility Scale vs. Distributed Solar Generation(1) Annual MWhrs Generated per $10 MM of Solar Capital Investment 14,000 13,000 12,000 10,000 8,000 5,800 6,000 4,000 3,100 2,000 0 Utility-Scale DG - C&I
Slide 28: Projected Capital Expenditures
Significant opportunity set to continue these initiatives and further improve our already outstanding customer value proposition Projected Capital Expenditures(1) $B $5.0 $4.5 $3.9 - $4.3 $4.0 $3.4 - $3.8 $3.3 - $3.8 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2015E 2016E 2017E - 2018E Annual Average (1
Slide 29: FPL's net income, regulatory capital employed and ROE
FPL’s net income is largely a function of capital employed, capital structure (equity ratio) and ROE earned Net Income, Regulatory Capital Employed and ROE Net Income Regulatory Capital Employed $1,600 $1,517 $35 $1,400 $1,349 $30 $1,200 $29.3 $25 Total 13-Month $27.7 Net $1,000 Average Income $20 R
Slide 30: NextEra Energy Resources
NEXTeCra’ ENERGY & RESOURCES
Slide 31: 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 future growth Skills and Capabilities + Asset Portfolio Future Growth • Largest, most • Terrific portfolio of • Strong backlog of successful greenfield signed wind and solar developer in clean en
Slide 32: Energy Resources' generation portfolio is diverse, clean and low cost
Energy Resources’ generation portfolio consists of a diverse set of technologies positioned in a number of regions and is clean and low cost Energy Resources’ Generation Portfolio(1) Wind 58% Natural Gas Nuclear 20% Oil 2,721 MW 4% Solar Nuclear 4% 14% 1,400 CO2 Emissions (lbs/MWh) 1,200 2014 1,000
Slide 33: Energy Resources has a strong track record of growth
Energy Resources has a strong track record of growth Business Growth Adjusted EBITDA(1)(2) Adjusted Earnings(1)(2) $ MM $ MM 3,500 3,350 1,000 862 3,000 2,584 2,500 750 685 2,000 1,878 553 500 1,500 1,000 622 250 173 500 351 73 0 0 2001 2003 2007 2011 2014 2001 2003 2007 2011 2014 Adjusted earnings
Slide 34: Adjusted EBITDA mix continues to shift to contracted assets
Energy Resources' adjusted EBITDA mix continues to shift to contracted assets Business Mix by Adjusted EBITDA(1) • Growth is primarily in 100% contracted businesses 11% 12% 15% 13% • Continue to consciously 75% 40% 24% de-emphasize merchant 50% • Peripheral businesses play 72% 64% an important suppo
Slide 35: Renewable program is well positioned for continued success
Energy Resources’ renewable program is well positioned for continued success Wind and Solar Additions 2015 – 2018(1) COD & Additional Additional Current 2015-2016 2017-2018 2015 – 2018 Backlog(2) Forecast Forecast U.S. Wind 1,180 900 – 1,100 750 – 850 Canadian Wind 174 -- -- U.S. Solar 1,262 -- 400
Slide 36: Wind technology: falling delivered cost of new installations
Turbine price reductions and efficiency improvements continue to reduce the average delivered cost of new wind installations Wind Technology Levelized Cost of Net Capacity Factor(1) Electricity from Wind(2) 60% $70 55% $60 50% $55- $65 $50 45% •0% PTC $/MWh $40 40% $36- $42 35% $30 $30- $36 $28- $32
Slide 37: Solar installation costs are declining and efficiency is improving
Solar installation costs are declining and efficiency is improving; the gap on price competitiveness versus conventional generation continues to narrow Solar Technology PV Module Efficiency Levelized Cost of and Delivered Cost(1) Electricity from Solar(2) 19.0% $0.80 $160 $0.71 18.0% Lower CapEx and
Slide 38: Demand for renewables driven by the EPA Clean Power Plan
Further out, demand for renewables will also be driven by the requirement for lower emission rates under the EPA Clean Power Plan EPA Clean Power Plan U.S. CO2 2020-2030 Potential Reduction Targets Renewable Demand 1,800 EPA’s “building 1,500 blocks” are Southeast used to hit 2030 PJM States 22% 1,2
Slide 39: Expanding into the pipeline business
We have leveraged our skills and capabilities from Gas Infrastructure activities to expand into the pipeline business Gas Pipeline Assets Sabal Trail and Florida Southeast Connection (FSC) • NextEra to invest ~$1 B in Sabal – FPL received Florida PSC approval for transportation capacity contracts in
Slide 40: Competitive transmission opportunity set
Lone Star was the first significant project for our transmission business followed by awards in Ontario and California Competitive Transmission Opportunity Set Awarded Projects Incremental Potential Texas Lone Star Competitive Solicitations Underway/Pending • 330 mile, 345 kV line and five substatio
Slide 41: Estimated Capital Expenditures Summary
Plans include roughly $15 B of growth capital primarily related to wind, solar and infrastructure projects, in addition to roughly $1.5 B in maintenance capital Estimated Capital Expenditures Summary $6 $5.2-$5.6 Energy Resources Growth Capital(1) Infrastructure(2) $5 $4.5-$4.9 Maintenance Capital $
Slide 42: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 43: NextEra Energy Partners is a best-in-class Yieldco
NextEra Energy Partners is a best-in-class Yieldco NextEra Energy Partners – Investment Proposition • Growth-oriented partnership formed by NextEra Energy – Strong sponsor with proven development track record – Access to management, skills and industry-leading expertise of NEE to monitor and operate
Slide 44: NEP portfolio of geographically diversified projects
NEP portfolio consists of geographically diversified projects operating under long-term contracts NEP Portfolio Stateline, 300 MW Baldwin,102.4 MW Conestogo, 23 MW Bluewater, 60 MW Ashtabula III, 62.4 MW Tuscola Bay, 120 MW Summerhaven, 124 MW Northern Colorado, 174 MW Sombra, 20 MW Moore, 20 MW Per
Slide 45: NEP's distributable cash flow is driven by OpCo distributions
NEP’s distributable cash flow is driven by OpCo distributions Distribution Policy Public Unitholders • The operating subsidiaries manage the project entities, service debt payments and NextEra Energy NextEra Energy fund any maintenance CapEx Partners requirements • The OpCo manages the cash Distribu
Slide 46: Aligned interests with NextEra Energy
Aligned interests with NextEra Energy IDR Fee Asset Sale Interest Proceeds Accretive Increase Drop- IDR Fee Downs Cash Flows Driving LP Unit Growth is the Key LP Distribution Growth Retained LP Stake 46
Slide 47: NEP asset portfolio may become more diverse
Over time we expect that the NEP asset portfolio may become more diverse Characteristics of Potential Additional a Strong Yieldco Asset NEP Asset Classes • Strong, stable, predictable • Contracted fossil cash flow generation • Long term contract • Pipelines • Limited ongoing • Independent transmissi
Slide 48: Financial Review
NEXT@ra ANANCIAL REVIEW
Slide 49: Credit expectations are on track and continue to improve
Our current credit expectations are on track and continue to improve Credit Expectations Actual Projected Projected S&P A- Range 2014 2015 2016 FFO/Debt 23%-35% 25% 26% 26% Debt/EBITDA(1) 2.5x-3.5x 3.5x 3.4x 3.4x Actual Projected Projected Moody’s Baa Range 2014 2015 2016 CFO Pre-WC/Debt 13%-22% 21%
Slide 50: Business mix shifting towards regulated and long-term contracted
NextEra Energy’s business mix is expected to continue to shift towards more regulated and long-term contracted Adjusted EBITDA(2) from Adjusted Earnings from Regulated and Long-Term Regulated Businesses(1) Contracted Operations 100% 100% 84% 78% 80% 80% 66% 58% 60% 60% 40% 40% 20% 20% 0% 0% 2011 201
Slide 51: Current dividend policy reflects regulated and contracted contribution
NextEra Energy’s current dividend policy reflects the proportionate contribution from its rate-regulated businesses and long-term contracted assets Dividend Per Share Growth Dividend Policy $3.08(1) 2005 to 2015 CAGR: ~8% $2.90 • Conservative payout ratio of $2.64 55% $2.40 $2.20 • We expect DPS gro
Slide 52: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS Z 52
Slide 53: NEX Tera
NEX Tera ENERGY &
Slide 54: The Investor Relations website is a great source for company information
The Investor Relations website is a great source for company information NEE Investor Relations Website • You can find the IR home page here on the main www.nexteraenergy.com site: 54
Slide 55: 2015-2018 Contracted Renewables Development Program
2015-2018 Contracted Renewables Development Program(1,2) Wind Location MW(2) COD Solar Location MW(2) COD Golden Hills CA 83 2015 McCoy Solar CA 250 2016 Golden West CO 249 2015 Blythe CA 110 2016 Carousel CO 150 2015 Adelanto I & II CA 27 2015 Cedar Bluff KS 199 2015 Shafter CA 20 2015 Dickinson ND
Slide 56: Reconciliation of 2011 Adjusted EBITDA to Net Income
Reconciliation of 2011 Adjusted Earnings Before Interest, Taxes Depreciation and Amortization (Adjusted EBITDA) to Net Income (Full-Year Ended December 31, 2011) ($ in millions) GAAP Adjustments Adjusted (1) Net income $1,923 ($86) $1,837 Add back interest 1,034 0 1,034 (1) Add back income taxes 529
Slide 57: Reconciliation of Adjusted Earnings to Net Income
Reconciliation of Adjusted Earnings to Net Income ($ millions) 2011 Net Income $1,923 Adjustments, net of income taxes: Net unrealized mark-to-market losses (gains) associated with non-qualifying hedges (190) Loss (income) from other than temporary impairment losses, net 6 Loss on sale of natural ga
Slide 58: 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 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $2.48 $2.34 $3.23 $3.27 $4.07 $3.97 $4.74 $4.59 $4.56 $4.47 $5.6
Slide 59: Reconciliation of Adjusted Earnings to GAAP Net Income (Q1 2015)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2015) 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 60: Reconciliation of Adjusted Earnings to GAAP Net Income (Q1 2014)
Reconciliation of Adjusted Earnings to GAAP Net Income (Three Months Ended March 31, 2014) Florida Pow er Energy Corporate & NextEra Energy, (m illions, except per share am ounts) & Light Resources Other Inc. Net Incom e (Loss) $ 347 $ 86 $ (3) $ 430 Adjustments, net of income taxes: Net unrealized
Slide 61: Reconciliation of Net Income to Adjusted Earnings
NextEra Energy, Inc. Reconciliation of Net Income Attributable to NextEra Energy, Inc. to Adjusted Earnings ($ millions) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net Income Attributable to NextEra Energy, Inc. $896 $901 $1,281 $1,312 $1,639 $1,615 $1,957 $1,923 $1,911 $1,908 $2,465 Adj
Slide 62: Definitional information
Definitional information NextEra Energy Resources, LLC. Adjusted EBITDA Adjusted EBITDA includes NextEra Energy Resources consolidated investments, excluding Spain, its share of NEP IPO and estimated investments consistent with accelerated growth, as well as its share of equity method investments. A
Slide 63: 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 64: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) threats of terrorism and catastrophic events that could result from terrorism, cyber attacks or other attempts to disrupt NextEra Energy's business or the businesses of third parties; inability to obtain adequate insurance
Slide 65: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 66: NextEra Energy Partners Portfolio Information
NextEra Energy Partners Portfolio Information(1) Contract Contract (2) NEP Portfolio Type MW COD Expiration NEP ROFO Portfolio : Type MW COD Expiration Northern Colorado Wind 22.5 Sept 2009 2029 Story II Wind 150 Dec 2009 2030 Northern Colorado Wind 151.8 Sept 2009 2034 Day County Wind 99 Apr 2010 2
Slide 67: 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 68: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP is subject to risks associated with litigation or administrative proceedings that could materially impact its operations, including future proceedings related to projects it subsequently acquires; the Summerhaven, Cones
Slide 69: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's subsidiaries’ substantial amount of indebtedness may adversely affect NEP's ability to operate its business and its failure to comply with the terms of its subsidiaries’ indebtedness could have a material adverse effe
Slide 70: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP GP’s interest in NEP and the control of NEP GP may be transferred to a third party without unitholder consent; the IDR fee may be transferred to a third party without unitholder consent; NEP may issue additional units w