Xplr Infrastructure, Lp · NYSE:XIFR
Xplr Infrastructure, Lp — NextEra Energy Partners — Investor Presentation (August 2016)
35 slides from Xplr Infrastructure, Lp's investor presentation, August 2016
Slide 1: NextEra Energy Partners, LP August 2016 Investor Presentation
NextEra Energy Partners, LP August 2016 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 Partners (NYSE:NEP) Slide 4 • Organization and Structure Slide 8 • Overview of Sponsor Slide 9 • Drivers of Renewables Slide 14 • Financial Review Slide 24 • Appendix Slide 27 3
Slide 4: NEP Overview
NextEra Energy Partners (NEP) is focused on investing in clean energy assets with stable cash flows NEP Overview • NEP is a growth-oriented partnership formed by NextEra Energy, Inc. (NEE) to: – Acquire contracted clean energy projects with stable, long-term cash flows from NEE and the market – Take
Slide 5: 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: – 4 projects – ~310 MW • Pipeline assets: – Seven natural gas pipelines – ~542 miles – ~3 Bcf of contracted and ~4 Bcf total capacity (1) Consolidated project
Slide 6: NEP Portfolio Characteristics
NEP has diversified its high-quality asset base while maintaining the long contract life, minimal commodity risk, and largely investment-grade counterparty mix of its portfolio NEP Portfolio Characteristics Counterparty Credit(1,2) Contract Life(2) A2 A3 21 Years 19 Years IPO 7/5/2016 IPO 7/5/2016 A
Slide 7: NEP Portfolio Additions
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 Additions Renewables Capacity(1) Pipeline Assets 2,656 MW ~4 Bcf 990 MW 0 IPO 7/5/2016 IPO 7/5/2016 Run-Rate CAFD(2) Annualiz
Slide 8: NEP Organizational Structure
NEP is a growth-oriented limited partnership with many structural attributes that create value for LP holders NEP Organizational Structure • OpCo Ownership NEE – Public investors own economic interest in ~100% ~71% OpCo through 100% ownership of NEP Economic Economic Interest in NEP Interest in OpCo
Slide 9: 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 9
Slide 10: NextEra Energy: Partnership with NEP
We believe the strength of NextEra Energy (NEE) makes it the premier YieldCo sponsor in the sector NextEra Energy: Partnership with NEP • Characteristics of a premier sponsor: NEE – Scale, financial strength and experience – Strong development track record – Incentives properly aligned with Yiel
Slide 11: 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 • $59 B market capitalization(1) • 45 GW in operation(2) • $85 B in total assets • Partnership with • One of the largest electric • The world leader in utilities in the nation by electricity generated from retail MWh
Slide 12: NextEra Energy Resources is a diversified clean energy company
NextEra Energy Resources is a diversified clean energy company whose skills and assets are well aligned to drive growth NextEra Energy Resources Skills and Capabilities Generation Portfolio(1) • Largest, most successful developer of renewables in North America – Consistent strategy to build, own and
Slide 13: 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) 18,000 Customer Wind Relationships Engineering/ Regulatory 12,000 Solar Construction MW Management 6,000 0 Best-In-Class Integrated 2002 2004 2006 2008 2
Slide 14: Drivers for New Renewables
NEP believes that the opportunities for renewables have never been stronger Drivers for New Renewables • Certainty of U.S. Federal Tax incentives for renewables • Improvements in wind and solar technology and declining cost trends • State regulatory programs to encourage development of renewable ene
Slide 15: U.S. Federal tax incentives for completed renewables projects have been extended
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(1) During 20
Slide 16: Wind Technology cost reductions
Turbine price reductions and efficiency improvements due to blade length and tower heights have reduced the average delivered cost of new wind Wind Technology Levelized Cost of Net Capacity Factor(1) Electricity from Wind(2) 60% $70 55% $60 50% $50 45% $/MWh $55- $40 $65 40% $36- $30 $42 $30- 35% $2
Slide 17: Solar installation costs are declining and efficiency is improving
Solar installation costs are declining and efficiency is improving Solar Technology PV Module Efficiency Levelized Cost of and Delivered Cost(1) Electricity from Solar(2) 19.0% Efficiency Cost $0.80 $160 $0.71 18.0% $0.62 $0.65 $120 17.0% $0.54 16.7% $/Wdc $/MWh 16.0% 16.5% $146 16.2% $0.50 $80 16.0
Slide 18: Distribution Mechanics
NEP distributable cash flow is driven by OpCo distributions Distribution Mechanics Public • The operating subsidiaries Unitholders manage the project entities, service debt payments and fund any maintenance CapEx NextEra Energy Partners NextEra Energy requirements • OpCo manages the cash flowing fro
Slide 19: Tax equity financing for projects
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 20: HoldCo Debt Capacity
As of the July 5, 2016 acquisition, NEP had $300 - $400 MM of remaining HoldCo debt capacity HoldCo Debt Capacity $1,075-$1,175 $775 $MM 3.5x $21-$31 $310-$340 $300-$400 $10-$20 $37-$41 $230-$260 Estimated Corporate IDR Fees(2) HoldCo Cash HoldCo Current Remaining (2) (2) (3) Pre-tax Expenses Intere
Slide 21: Optimizing Capital Structure
NEP continues to evaluate the optimal capital structure for distribution growth, which includes a combination of HoldCo debt and equity to fund an acquisition Optimizing Capital Structure • NEP typically purchases assets financed with tax Assuming a long- term capital equity or project debt structur
Slide 22: Illustrative Asset Acquisition
NEP’s long-term capital structure target should be incorporated when evaluating asset-level returns Illustrative Asset Acquisition • 100 MW wind asset Purchase HoldCo Residual • Purchase price: Price Debt(1) Equity – $100 MM, plus assumption of tax equity or project debt Equity $100 MM ($35 MM) $65
Slide 23: Illustrative IDR Split
An acquisition's CAFD/unit then flows through the IDR tiers to determine how much of the cash will flow to LP unitholders in order to calculate their return Illustrative IDR Split $4.00-$5.00 CAFD/Unit X 80% Payout Ratio = $3.20-$4.00/Unit LP IDR $1.125 First $1.20/unit always allocated in this rati
Slide 24: Financial Review
NExTera energy” PARTNERS Z FANANCIAL REVIEW
Slide 25: NEP LP Distributions Long-Term Growth Outlook
After the acceleration of growth in 2015, our current expectations are for NEP to grow LP distributions by 12-15% annually through 2020 NEP LP Distributions Long-Term Growth Outlook(1) $2.17-$2.47 $2.50 $2.00 $1.50 $1.38-$1.41 $1.23 $1.00 $0.50 $0.00 2015 2016 2017 2018 2019 2020 12% Growth 15% Grow
Slide 26: Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners’ Adjusted EBITDA and CAFD Expectations(1,2) Adjusted EBITDA CAFD 12/31/16 Run Rate(3) $670 - $760 MM $230 - $290 MM Unit Distributions 2016 $1.38 - $1.41 annualized rate by year end(4) 2016 - 2020 12% - 15% average annual growth(5) (1) See Appendix for definition of Adjusted
Slide 27: Appendix
27 Appendix NexTera energy” PARTNERS 2
Slide 28: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2016 Run Rate CAFD) $750-$840(2) ($10-$20) ($40-$60) $670-$760 ($240-$260)(3) ($155-$205)(4) $ MM ($25-$30)(5) ($3-$8) $230-$290(6) Project-level Corporate IDR Adjusted Debt Service Pre-tax Non-Cash Maintenance Estimated Adjusted Expenses Fee
Slide 29: Adjusted EBITDA to CAFD
Similar to MLPs, distributions to NEP’s LP unitholders are paid from cash available for distribution (CAFD), which is derived from the following calculation Adjusted EBITDA to CAFD(1) Adjusted EBITDA Includes pre-tax PTCs earned by NEP and PTCs allocated to tax equity investors - Debt Service Amorti
Slide 30: Incentive Distribution Fee Overview
Structure incorporates the IDR Fee structure from typical MLPs Incentive Distribution Fee Overview • IDR Fee entitles an affiliate of sponsor to receive an increasing share of distributions as benchmarks for OpCo distributions are achieved (up to 50%) Cash Flow $/ Unit & Split levels Example with $2
Slide 31: 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 32: 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 33: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) which could have material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders; NEP may incur significant costs and liabilities as a result o
Slide 34: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) infrequent and often competitive procurement windows; NEP may continue to acquire other sources of clean energy, including, without limitation, natural gas and nuclear projects, and may expand to include other types of asse
Slide 35: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) If NEP incurs material tax liabilities, NEP's distributions to its unitholders may be reduced, without any corresponding reduction in the amount of the IDR fee; Holders of NEP's common units have limited voting rights and a
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