Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (March 2014)
56 slides from Nextera Energy's investor presentation, March 2014
Slide 1: 2014 March Investor Presentation
2014 March Investor Presentation
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results Any statements made herein about future operating and/or financial results and/or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These f
Slide 3: Table of Contents
Table of Contents • NextEra Energy, Inc. Overview Slide 4 • Florida Power & Light Slide 13 • NextEra Energy Resources Slide 19 • NextEra Energy, Inc. Financial Review Slide 26 • Appendix Slide 36 3
Slide 4: NextEra Energy is well-positioned for future growth
NextEra Energy is well-positioned for future growth NextEra Energy – Investment Proposition • Above-average and highly visible growth through 2016 – Rate agreement through 2016 provides regulatory certainty at FPL – Strong backlog at Energy Resources with upside potential • Strong and increasing cas
Slide 5: 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 • $39.6 B market capitalization(1) • 42,576 MW in operation • $69 B in total assets • One of the largest U.S. electric utilities • U.S. leader in renewable generation • 4.7 MM customer accounts • Assets primarily in
Slide 6: Our business strategies are straightforward
Our business strategies are straightforward Competitive Strategy Florida Power & Light NextEra Energy Resources Customer Satisfaction • Competitive Markets Superior Customer Constructive • Diverse Customer Segments Value Virtuous Circle Regulatory Environment Delivery Strong Financial Position • Low
Slide 7: FPL's operational cost effectiveness continues to be outstanding
FPL’s operational cost effectiveness continues to be outstanding 2012 Operational Cost Effectiveness(1) $100.00 Adjusted Regressed Good Top Quartile Top Decile $/ Retail MWh FPL 2012 = $16.22/MWh FPL 2016 Projected = $14.92/MWh $10.00 1 10 100 1,000 Retail MWh (MM) 1) FERC Form 1, 2012 total operati
Slide 8: FPL's O&M costs declined through 2005, but in recent years they have increased
FPL’s O&M costs declined through 2005, but in recent years they have increased FPL – Base O&M Costs in Real 2012 Dollars(1) 3.50 3.24 3.00 2.50 ¢ per 2.00 kWh 1.43 1.47 1.50 1.34 1.20 - 1.30 1.00 0.50 0.00 1988 2000 2005 2012 2016E FPL’s goal is to get back to a trend of positive O&M productivity in
Slide 9: Project Momentum has provided a line of sight to keep nominal base O&M flat in 2016
Project Momentum has provided a line of sight to achieve our goal of keeping nominal base O&M expenses flat in 2016 FPL Productivity Improvements • Moving forward with several initiatives with significant O&M cost savings in the following areas: – Nuclear operations – Transmission and distribution –
Slide 10: NextEra Energy is built on a foundation of operational excellence and financial strength
NextEra Energy is built on a foundation of operational excellence and financial strength SAIDI: System Average (1) Interruption Duration Index Utility Credit Ratings(3) Minutes 40% 38% 150 FL Industry Average Good 125 35% NextEra Energy 100 FPL 30% 75 50 25% 22% 25 20% '06 '07 '08 '09 '10 '11 '12 20
Slide 11: NextEra Energy has one of the cleanest emissions profiles among top 50 power producers
NextEra Energy has one of the cleanest emissions profiles among the nation’s top 50 power producers NextEra Energy 2013 Fuel Mix(1) SO2 Emissions Rates(2) (MWh) (Lbs/MWh) 9.0 7.5 Nuclear Wind 27% 16% Coal 3% 6.0 Solar <1% 4.5 Oil & Hydro <1% NextEra 3.0 Energy Natural Gas 52% 1.5 0.0 3.0 NOx Emissio
Slide 12: We have been successful in outperforming our industry
Over an extended period of time, we have been successful in attaining our goal of outperforming our industry NextEra Energy Performance vs. Industry 10-Year CAGR Ending December 31, 2013 S&P 500 Utilities NextEra S&P 500 Index Energy Adjusted EPS (2002-2012)(1) 9.0% 0.2% 6.6%(2) Dividend per Share(3
Slide 13: 13
13
Slide 14: 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 • 4.7 MM customer accounts • 24,273 MW in operation • $10.4 B in operating revenues • $36 B in total assets 14
Slide 15: Excellent progress on our backlog of major capital projects in 2013
We have made excellent progress on our backlog of major capital projects in 2013 FPL’s Backlog of Major Capital Projects Modernization Projects Nuclear Uprates • Cape Canaveral completed • Successfully completed our ahead of schedule and under extended nuclear power budget uprate program in April 20
Slide 16: $4 B to $5 B in incremental capital expenditures that we continue to develop
In March 2013 we laid out $4 B to $5 B in incremental capital expenditures that we continue to develop Incremental Capital Expenditures Through 2016 • Incremental storm hardening • Infrastructure / reliability investment • Generation upgrades $4 B - $5 B • Natural gas pipelines(1) • Vero Beach acqui
Slide 17: Florida PSC has approved FPL's natural gas pipeline proposal
The Florida Public Service Commission has approved FPL’s natural gas pipeline proposal Natural Gas Pipeline Investments • Best economic solution for customers – Sabal Trail Transmission (Spectra Energy): – ~465 miles to Central Florida Hub – Estimated capital cost of ~$3 B – NextEra Energy to invest
Slide 18: Florida's economy continues to improve
Florida’s economy continues to improve Florida Economy Florida Unemployment Rate(1) Florida Building Permits(2) 12% 12,000 10% 10,000 8% 8,000 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-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Florida Mortgages 90+ Days
Slide 19: NextEra Energy Resources
NEXTeCra’ ENERGY & RESOURCES
Slide 20: What is Energy Resources?
What is Energy Resources? A Set of Skills + A Set of Assets • Largest greenfield developer in • Largest wind and solar North America over the last decade renewable portfolio in North – Over 12,000 MW of greenfield America development • Over 11,000 MW of stable long- • Leader in generation constructi
Slide 21: Energy Resources' risk profile continues to improve as mix shifts to contracted assets
Energy Resources’ risk profile continues to improve as the business mix shifts to more long-term contracted assets Energy Resources’ Adjusted EBITDA(1) 100% 11% 15% 14% 75% 22% 40% 26% 50% 59% 64% 25% 49% 0% 2009 2012 2014 Long‐Term Contracted Merchant Peripheral Businesses 21 (1) See appendix slide
Slide 22: Generation portfolio includes over 11,000 MW of contracted assets
Our generation portfolio includes over 11,000 MW of contracted assets, which are primarily wind and nuclear Energy Resources: Contracted Assets(1) Technology MW Wind 8,366 Nuclear 1,621 Solar 472 Natural Gas 1,003 Total: 11,462 22 (1) As of December 31, 2013; excludes Spain solar project
Slide 23: Our wind fleet has grown to a size comparable to a top utility
Our wind fleet has grown to a size comparable to a top 15 utility Energy Resources Wind Portfolio Cumulative Wind Growth Top US Wind Developers/Owners(1) (Megawatts) (Megawatts) 12,000 10,210 10,057 10,210 10,000 8,298 8,569 7,544 8,000 6,375 5,077 6,000 5,444 4,016 3,192 4,000 3,637 2,719 2,758 2,6
Slide 24: We have a strong pipeline of new projects to continue our growth
We have a strong pipeline of new projects to continue our growth Total Wind and Solar Additions 2012 to 2016 Wind 2012 Actual 2013 Actual 2014-15 Est.(1) United States ~1,500 MW ~250 MW ~1,175 MW Canada ~20 MW ~125 MW ~466 MW Solar 2012 Actual 2013 Actual 2014-16 Est.(1) United States ~280 MW ~800 M
Slide 25: Energy Resources is the U.S. leader in renewable energy
Energy Resources is the U.S. leader in renewable energy and has solid growth prospects supported by a solid strategic focus Diversified portfolio: fuel type and geography Stable cash flows from mostly contracted assets – Securing long-term power purchase agreements for new projects One of the
Slide 26: Financial Review
NEXT@ra ANANCIAL REVIEW
Slide 27: NextEra Energy has received approximately $17 billion of credit
NextEra Energy has received approximately $17 billion(1) of credit, including commitments and funded transactions Country Breakdown by Funding U.S. $2.9 billion We have a balanced and well-diversified lending group (1) ~$17.4 billion of credit includes corporate credit facilities commitments and ter
Slide 28: Capital expenditures will likely average about $5 B - $6 B per year
Capital expenditures for the next several years will likely average about $5 B - $6 B per year 2013 – 2016 Capital Expenditures(1) ($ B) 2013 2014 2015 2016 (2) Committed Capital Expenditures FPL $2.9 $3.2 $2.5 $2.2 NEER Renewables 2.6 2.2 0.8 0.5 NEER Other 1.0 0.8 0.3 0.4 Corporate and Other 0.2 0
Slide 29: We expect our operating cash flow to continue to improve
We expect our operating cash flow to continue to improve NextEra Energy’s Free Cash Flow Before Dividends 2013 Actual 2014 Operating Cash Flow $5.1 B $5.3 B to $5.6 B Capital Expenditures(1) ($6.7) B ($6.4) B to ($7.1) B Other Investing $0.6 B $0.4 B to $0.6 B Activities(2) Free Cash Flow ($1.0) B (
Slide 30: Balance sheet strength and credit play an important role in our strategy
Balance sheet strength and credit play an important role in our strategy NextEra Energy 2014 Credit Metric Targets(1) Moody’s Baa Range NEE Target • CFO Pre-WC/Debt 13% - 22% 20% • Debt Capitalization 45% - 55% 50% Fitch A Range NEE Target • FFO/Debt 20% - 26% 21% • FFO/Interest 4.5x - 5.6x 5.2x S&P
Slide 31: Market risk mitigated by our significantly hedged position
Market risk will be mitigated by our significantly hedged position over the next several years Energy Resources Equivalent Gross Margin Contracted or Hedged(1) 100% 99% 100% 100% 100% 96% 94% 91% 82% 80% 60% 40% 20% 0% 2014 2015 2016 2017 Existing New 31 (1) See appendix slide 53 for definition of E
Slide 32: Business mix shifting towards more 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% 65% 58% 60% 60% 40% 40% 20% 20% 0% 0% 2011 201
Slide 33: Dividend policy reflects increased contribution from regulated and contracted businesses
NextEra Energy’s current dividend policy reflects its expected increase in the proportionate contribution from its rate-regulated businesses and long-term contracted assets Dividend Per Share(1) Growth Dividend Policy • Implemented dividend policy $2.90(2) 2011 to 2014 CAGR: ~10% $2.64 of 55% target
Slide 34: Focus for 2014
Focus for 2014 • NextEra Energy: – Project Momentum: Implement the many initiatives to underpin our strong cost position – Maintain a strong credit position • FPL: – Maintain leading customer value proposition – Continue execution on large construction projects – Finalize scope for peaking facilitie
Slide 35: NEX Tera
NEX Tera ENERGY &
Slide 36: Appendix
36 Appendix NeExTera’ ENEBIGY 2
Slide 37: History of state deregulation
While the majority of states use “cost-of-service” ratemaking, a number of states have gone through deregulation History of State Deregulation • During the 1990s, a number of states adopted different regulatory models to encourage competition among generators to serve retail customers • Status of el
Slide 38: Multiple regulators govern rate setting, transmission, reliability, and environmental protection
Multiple regulators, at the federal and state level, govern rate setting, transmission, reliability, and environmental protection Major Regulatory Agencies • Federal Energy Regulatory Commission (FERC) – FERC has also encouraged the formation of regional transmission organizations (RTOs) and Indepen
Slide 39: Florida is regulated by the Florida Public Service Commission
Florida is regulated by a state agency known as the Florida Public Service Commission Florida Public Service Commission • Consists of five members selected for their knowledge and experience in fields substantially related to the duties and functions of the Commission – Commissioners are appointed b
Slide 40: FPL's costs are recovered through base rates and clause mechanisms
FPL’s costs are recovered through base rates as well as through clause mechanisms Cost Recovery Mechanisms • Base rates – designed to recover the costs of constructing, operating, and maintaining a utility system – Generally, most of FPL’s return is earned through base rates • Cost recovery clauses
Slide 41: The U.S. electric power sector faces a number of challenges
The United States electric power sector faces a number of challenges United States Electric Power Industry Overview • Electricity demand growth in the United States is projected to be flat through 2015(1) – Demand in Florida is projected to grow faster than the national average • Economics turned up
Slide 42: The U.S. power industry varies meaningfully by region
The United States power industry varies meaningfully by region United States Power Markets Large and small regulated and Regulated Geographically Transmission & dispersed merchant utilities Distribution regulated utilities Large merchant utilities Large regulated utilities Large regulated utilities
Slide 43: NextEra Energy's facilities are located throughout the nation's power markets
NextEra Energy’s facilities are located throughout the nation’s power markets NextEra Energy U.S. Facility Locations Geographically dispersed Large and small regulated regulated and Regulated utilities merchant Transmission & utilities Distribution Large merchant utilities Large regulated utilities
Slide 44: The Investor Relations website is a great source for company information
The Investor Relations website is a great source for company information Investor Relations Website • You can find the IR home page here on the main www.nexteraenergy.com site: 44
Slide 45: Investor Relations website home page
The most current events and newly posted information will appear in the carousel at the top of the IR home page Investor Relations Website – Home Page 45
Slide 46: Investor Relations website: earnings and supplements
You can access all of our quarterly earnings materials and listen to the webcast of the earnings call Investor Relations Website – Earnings & Supplements • Earnings call webcast and other materials can be accessed through the “Earnings Releases” section • Non-GAAP Reconciliations are available under
Slide 47: Investor Relations website: other resources
You can also download any recent presentation, FPL and NEER asset portfolios, and other information Investor Relations Website – Other Resources • Under “Business Updates,” you can find NEE’s full asset portfolio and wind resource performance, among other items • All of the recent presentations are
Slide 48: NextEra Energy Resources Portfolio Additions
NextEra Energy Resources Portfolio Additions(1) (2) March 2013 Investor Conference Backlog Incremental Opportunities Incl. in 12/31/13 Incl. in 12/31/13 U.S. Wind: MW COD Form 10-K(3) U.S. Wind: MW COD Form 10-K(3) Tuscola Bay II (4) 100.3 2013 Yes Tuscola Bay II (4) 100.3 2013 Yes Steele Flats(4) 7
Slide 49: Reconciliation of Base O&M Cents per kWh to GAAP O&M Cents per kWh
Reconciliation of Base O&M Cents per kWh to GAAP O&M Cents per kWh 1988 2000 2005 2012 ($ in millions) Base O&M (A) $1,131 $984 $1,199 $1,500 Clause 32 77 99 269 Other 0 1 9 4 GAAP O&M (B) $1,163 $1,062 $1,307 $1,773 Retail delivered kWhs (in millions) (C) 59,163 88,128 101,980 102,128 Base O&M cent
Slide 50: Reconciliation of 2011 Adjusted EBITDA to Net Income
Reconciliation of 2011 Adjusted Earnings Before Interest, Taxes Depreciation and Amortization (Adjusted EBITDA) to Net Income (Full-Year Ended December 31, 2011) ($ in millions) GAAP Adjustments Adjusted (1) Net income $1,923 ($86) $1,837 Add back interest 1,034 0 1,034 (1) Add back income taxes 529
Slide 51: Reconciliation of Adjusted Earnings to Net Income
Reconciliation of Adjusted Earnings to Net Income ($ 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 52: Reconciliation of Adjusted Earnings Per Share to Earnings Per Share
NextEra Energy, Inc. Reconciliation of Adjusted Earnings Per Share to Earnings Per Share 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Earnings Per Share (assuming dilution) $1.38 $2.53 $2.48 $2.34 $3.23 $3.27 $4.07 $3.97 $4.74 $4.59 $4.56 Adjustments: Net unrealized mark-to-market (gains)
Slide 53: Definitional information
Definitional information NextEra Energy Resources, LLC. Adjusted EBITDA (Slides 21, 32) Adjusted EBITDA includes Energy Resources’ consolidated investments as well as its share of equity method investments. Adjusted EBITDA for each category set forth above is represented by (a) revenue, including a
Slide 54: 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 55: Cautionary Statement And Risk Factors That May Affect Future Results (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 by FPL and NextEra Energy Resources; exposure of NextEra Energy and FPL to cre
Slide 56: NEX Tera
NEX Tera ENERGY &