Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q3 2017 Earnings Presentation
46 slides from Nextera Energy's earnings presentation, Oct 26, 2017
Slide 1: Earnings Conference Call Third Quarter 2017
Earnings Conference Call Third Quarter 2017 October 26, 2017
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: Hurricane Irma Impact
FPL mobilized approximately 28,000 workers in one of the largest power restoration efforts in U.S. history Hurricane Irma Impact • Irma made two landfalls in Florida – Florida Keys at 9:10 am on 09/10 as a Category 4 storm – Marco Island at 3:35 pm 09/10 as a Category 3 storm • Irma impacted FPL cus
Slide 4: Hurricane Irma Recovery
FPL achieved a 60% improvement in the average number of outage days per customer compared to Hurricane Wilma Hurricane Irma Recovery Irma Wilma % Improvement Average Days out per 2.13 5.37 60% customer Days to Restore 10 18 44% 50% of Customers 1 Day 5 Days 80% Restored 75% of Customers 3 Days 8 Day
Slide 5: NextEra Energy Third Quarter 2017 Highlights
NextEra Energy achieved solid financial results in the third quarter NextEra Energy Third Quarter 2017 Highlights • NEE achieved adjusted EPS of $1.85(1), up 6.3% from the prior- year comparable quarter and up 9.2% for the first three quarters versus prior year • Continued solid execution at FPL: –
Slide 6: Florida Power & Light Results – Third Quarter
FPL’s EPS increased 8 cents from the prior-year comparable quarter Florida Power & Light Results – Third Quarter Net Income EPS ($ MM) $566 $1.19 $515 $1.11 2016 2017 2016 2017 6
Slide 7: Florida Power & Light EPS Contribution Drivers
The primary driver of FPL’s earnings growth was continued investment in the business Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(1) Third Quarter $B 40.0 $37.9 FPL – 2016 EPS $1.11 $34.6 35.0 Drivers: 30.0 New investments, incl. clause $0.09 25.0 Other, incl
Slide 8: Customer Characteristics & Florida Economy
Florida’s economy remains strong driving continued customer growth Customer Characteristics & Florida Economy Retail kWh Sales Customer Growth(1,2) (Change vs. prior-year quarter) (Change vs. prior-year quarter) 100 Customer Growth & Mix 0.6% 80 61.6 # of UKU Impact 60 + Usage Change Due to Weather
Slide 9: Energy Resources Results – Third Quarter
Energy Resources’ adjusted EPS increased ~3% from the prior-year comparable quarter Energy Resources Results(1) – Third Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $307 $292 $292 $0.66 $279 $0.62 $0.60 $0.62 2016 2017 2016 2017 2016 2017 2016 2017 1) Attributable to NEE, see Ap
Slide 10: Energy Resources Third Quarter Adjusted EPS Contribution Drivers
Energy Resources’ adjusted EPS growth driven by contributions from new investments Energy Resources Third Quarter Adjusted EPS(1) Contribution Drivers $0.80 $0.12 ($0.03) ($0.01) ($0.06) $0.70 $0.60 $0.62 $0.60 $0.50 $0.11 Renewables $0.01 Gas pipelines $0.40 $0.30 $0.20 $0.10 $0.00 Q3 2016 New Exis
Slide 11: Energy Resources Development Program
We continue to have an outstanding opportunity set for new renewables growth Energy Resources Development Program(1) • Announcing 730 MW of new wind and solar projects added to backlog – Includes 566 MW of wind for 2018 and 164 MW of solar for 2018 – 2020 • Added 514 MW to our wind repowering backlo
Slide 12: NextEra Energy EPS Summary – Third Quarter
NextEra Energy’s adjusted earnings per share increased ~6% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Third Quarter GAAP 2016 2017 Change FPL $1.11 $1.19 $0.08 Energy Resources $0.66 $0.62 ($0.04) Corporate and Other ($0.15) ($0.02) $0.13 Total $1.62 $1.79 $0.17 Adjuste
Slide 13: NextEra Energy Adjusted Earnings Per Share Expectations
NextEra Energy Adjusted Earnings Per Share Expectations(1) 2017 $6.35 - $6.85 2018 $6.80 - $7.30 2020 $7.85 - $8.45 Long-Term 6% - 8% CAGR through Growth Rate 2020 off a 2016 base On track to finish 2017 at or near the upper end of our previously disclosed 6% to 8% adjusted EPS growth expectations,
Slide 14: NextEra Energy Partners Third Quarter 2017 Highlights
NextEra Energy Partners continued its strong execution against its strategic and growth initiatives NextEra Energy Partners Third Quarter 2017 Highlights • Grew distributions per unit by ~15% from prior-year comparable period • Reached an agreement to acquire 691 MW from Energy Resources – Expected
Slide 15: NextEra Energy Partners – Third Quarter Drivers
NEP adjusted EBITDA and CAFD were impacted by lowest third quarter wind resource in past 30 years NextEra Energy Partners – Third Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $225 $80 $28 ($15) $200 $18 ($11) ($6) ($3) $70 $174 $178 $175 $60 ($6) $150 $51 ($5) $50 $47 $125 $40 $100 $30 $75
Slide 16: NEP Financing Update
NEP’s ongoing financing initiatives are expected to minimize the need for common equity NEP Financing Update • $300 MM Convertible Debt/Capped Call Transaction – 1.5% coupon for 3 years – Initial conversion rate represents a 25% premium to closing unit price – Capped call could provide upside simila
Slide 17: NextEra Energy Partners – Portfolio Additions
We continue to execute on our plan to expand NextEra Energy Partners’ portfolio NextEra Energy Partners – Portfolio Additions • Acquisition from NEE is expected to close by year-end Contract Project Resource MW COD Expiration(1) Desert Sunlight Solar 142.5 2014 2037 Brady I Wind 149.7 2016 2046 Brad
Slide 18: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/17 Run Rate(2) $875 - $975 MM $310 - $340 MM 12/31/18 Run Rate(3) $1,050 - $1,200 MM $360 - $400 MM Unit Distributions 2017(4) $1.58 - $1.62 annualized rate by year-end 2016 – 2022(5) 12% - 15% average annual
Slide 19: Q&A Session
Q&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 19
Slide 20: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 20
Slide 21: NExTera’
NExTera’ ENERGY @
Slide 22: Credit Metrics
NextEra Energy’s credit metrics remain on track Credit Metrics Actual Actual Target S&P A- Range 2015 2016 2017 FFO/Debt 23%-35% 26% 27% 26% Debt/EBITDA 2.5x-3.5x 3.3x 3.1x 3.2x Actual Actual Target Moody’s Baa Range 2015 2016 2017 CFO Pre-WC/Debt 13%-22% 21% 21% 21% RCF/Debt 9%-17% 16% 15% 15% Actu
Slide 23: 2018 Potential Sources of Variability
Potential drivers of variability to consolidated adjusted EPS 2018 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.03 - $0.04 • Timing of investment ± $0.04 - $0.05 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.01 - $0.02 • Wind
Slide 24: NextEra Energy Resources Projected 2017 Portfolio Financial Information
NextEra Energy Resources Projected 2017 Portfolio Financial Information (1) Adjusted EBITDA by Value of pre-tax tax Remaining Asset credits included in Maintenance Pre-Tax Cash Contract Category(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Life (8) NEER Contracted(9) Renewable
Slide 25: Wind Production Index
Wind Production Index(1)(2) 2016 2017 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 3,054 98% 84% 105% 96% 3,039 106% 100% 3,039 101% 3,039 104% 3,039 83% 72% 92% 83% 98% West 2,718 111% 100% 105% 105% 3,117 102% 100% 3,20
Slide 26: Contracted Renewables Development Program
Contracted Renewables Development Program(1) Wind Location MW Solar Location MW 2017 – 2018: 2017 – 2018: Oliver III ND 99 Whitney Point CA 20 Huron MI 150 Marshall MN 62 Golden Hills North CA 46 Stuttgart AR 81 Bluff Point IN 120 Westside CA 20 Eight Point NY 102 Blue Bell TX 30 Dodge County MN 200
Slide 27: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 1) Includes NextEra Energy’s share of contracts at consolidated projects and equity method investees 2) Removal of the hedge mark to market and settlements related to asset sales 27
Slide 28: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges – Summary of Activity ($ millions) 3rd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance (3) Description 6/30/17 Realized Prices (Loss) Other 9/30/17 Pretax Amounts Gross Generation Related: Natural gas related positions
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 9/30/17 4th Qtr 2017 2018 2019 2020 2021 - 2047 2017 - 2047 Pretax gross amounts Natural gas related positions $ 930.7 $ (44.9) $ (131.8) $ (123.7) $ (114.1) $ (516.2) $ (9
Slide 30: Reconciliation of Adjusted Earnings to GAAP Net Income (Q3 2017)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 2017) 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,
Slide 31: Reconciliation of Adjusted Earnings to GAAP Net Income (Q3 2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 2016) 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,
Slide 32: Reconciliation of Adjusted Earnings to GAAP Net Income (Nine Months 2017)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Nine Months Ended September 30, 2017) 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,
Slide 33: Reconciliation of Adjusted Earnings to GAAP Net Income (Nine Months 2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Nine Months Ended September 30, 2016) 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,
Slide 34: 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, net OTTI losses on securities held in NextEra Energy Resources’ nuclear deco
Slide 35: 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 36: 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 37: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 38: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q3 2017 Net income $ 38 Add back: Depreciation and amortization 50 Interest expense(1) 50 Income taxes 13 Tax credits 47 Benefits associated with differential membership interests (15) Adjustment fo
Slide 39: NEP Credit Metrics
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(1) BB Target Target (2) S&P Range YE 2017 YE 2018 Holdco Debt/EBITDA 4.0x - 5.0x 3.0x - 4.0x 4.0x - 5.0x Ba1 Target Target (3) Moody's Range YE 2017
Slide 40: 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 ($240-$290) ($270-$320) $ MM ($30-$35) ($3-$8) $310-$340 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service (2)
Slide 41: Expected Cash Available for Distribution (12/31/18 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,150-$1,300 ($20-$30) ($75-$85) $1,050-$1,200 ($240-$320) ($380-$460) ($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 42: 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 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 federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 44: 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 45: 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 46: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common 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 IDR fee may be assig