Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q1 2019 Earnings Presentation
45 slides from Nextera Energy's earnings presentation, Apr 23, 2019
Slide 1: Earnings Conference Call First Quarter 2019
Earnings Conference Call First Quarter 2019 April 23, 2019
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: NextEra Energy delivered strong first quarter results
NextEra Energy delivered strong first quarter results First Quarter 2019 Highlights • NEE grew adjusted EPS by ~12% year-over-year • FPL: – Regulatory capital employed growth of ~8% versus prior-year comparable quarter – ~1,750 MW Okeechobee Clean Energy Center completed on budget and ahead of sched
Slide 4: 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 – First Quarter Net Income EPS ($ MM) $588 $1.22 $484 $1.02 2018 2019 2018 2019 4
Slide 5: Continued investment in the business was the primary driver of growth at FPL
Continued investment in the business was the primary driver of growth at FPL Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(1) (Excluding Accumulated Deferred Income Taxes) First Quarter $B FPL – 2018 EPS $1.02 40.0 $35.4 Drivers: 35.0 $32.7 New investments $0.
Slide 6: FPL continues to identify smart capital investments
FPL continues to identify smart capital investments to further enhance its already best-in-class customer value proposition Florida Power & Light Development Highlights • Continue to progress one of the largest ever solar expansions – Recently filed Ten Year Site Plan projects ~7,000 MW of additiona
Slide 7: Gulf Power – First Quarter 2019
Gulf Power contributed 8 cents before accounting for financing costs reflected at Corporate & Other Gulf Power – First Quarter 2019 Results Highlights • Closed 1/1/2019 and integration is Net Income $37 MM progressing well • Achieved regulatory ROE of EPS $0.08 ~10.0% for 12 months ending March 2019
Slide 8: Florida's economic growth remains strong throughout the state
Florida’s economic growth remains strong throughout the state Florida Economy Florida Unemployment & Labor Participation Rates(1) Florida Consumer Sentiment(2) 12% 64% 110 63% 100 10% Labor Participation 62% Rate 8% (Right Axis) 90 61% 6% 60% 80 59% 70 4% 58% 2% 60 57% 0% 56% 50 Jan-10 Jan-11 Jan-12
Slide 9: FPL had strong customer growth in the first quarter
FPL had strong customer growth in the first quarter; Gulf Power customers decreased primarily due to Hurricane Michael Customer Characteristics FPL Retail kWh Sales FPL Growth(1,2) (Change vs. prior-year period) (Change vs. prior-year quarter) First 100 100 Quarter 80 Customer Growth & Mix 1.0% UKU
Slide 10: Energy Resources' adjusted EPS increased ~12%
Energy Resources’ adjusted EPS increased ~12% from the prior-year comparable quarter Energy Resources Results(1) – First Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $448 $0.93 $3,929 $8.26 $395 $0.83 $301 $0.63 2018 2019 2018 2019 2018 2019 2018 2019 1) Attributable to NEE, see
Slide 11: Energy Resources' strong growth was partially offset by weak wind resource
Energy Resources’ strong growth was partially offset by weak wind resource at our existing generation assets Energy Resources First Quarter Adjusted EPS(1) Contribution Drivers $1.00 $0.08 ($0.10) $0.03 $0.93 $0.06 $0.83 $0.03 $0.80 $0.60 $0.40 $0.20 $0.00 Q1 2018 New Existing Gas Customer Supply Ot
Slide 12: Energy Resources had another strong quarter of origination success
Energy Resources had another strong quarter of origination success Energy Resources Development Program(1) • Renewables backlog increased by 953 MW – 223 MW of wind, including 100 MW build-own-transfer project with 30-year O&M agreement – 485 MW of solar plus 50 MW of battery storage – 195 MW of win
Slide 13: NextEra Energy's adjusted earnings per share increased ~12%
NextEra Energy’s adjusted earnings per share increased ~12% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – First Quarter GAAP 2018 2019 Change FPL $1.02 $1.22 $0.20 Gulf Power - $0.08 $0.08 Energy Resources $8.26 $0.63 ($7.63) Corporate and Other $0.04 ($0.52) ($0.56) Total
Slide 14: We expect to grow adjusted EPS at a 6% - 8% CAGR
We expect to grow adjusted EPS at a 6% - 8% CAGR through 2021, plus accretion from the Florida acquisitions in 2020 and 2021 NextEra Energy’s Adjusted Earnings Per Share Expectations(1) $9.40 - • The Florida acquisitions are $8.70 - $9.95 expected to be $0.15 and $0.20 $8.00 - $9.20 accretive in 202
Slide 15: NEP announced a transaction to complete its 2019 growth objectives
During the quarter, NEP announced a transaction to complete its 2019 growth objectives, even after excluding PG&E-related cash flows NextEra Energy Partners First Quarter 2019 Highlights • NEP Board declared a quarterly distribution of $0.4825 per common unit, up 15% from prior-year comparable perio
Slide 16: NEP's first quarter results were in line with expectations
NEP’s first quarter results were in line with expectations after accounting for below normal wind resource NextEra Energy Partners – First Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $350 $150 $67 ($43) $300 ($30) $28 ($19) $260 $120 ($24) $250 ($30) ($3) ($2) $225 $97 $200 $90 ($23) Wind
Slide 17: NextEra Energy Partners – Transaction Highlights
The transaction announced this quarter further enhances NEP’s financing flexibility going forward NextEra Energy Partners – Transaction Highlights • Pending $900 MM convertible equity portfolio financing with KKR – Initial effective “coupon” of less than 1% – NEP will have flexibility to buy out KKR
Slide 18: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA(3) CAFD CAFD (Including PG&E) (Excluding PG&E) 12/31/19 Run Rate(2) $1,200 – $1,375 MM $485 – $555 MM $410 – $480 MM Unit Distributions 2019(4) $2.14 annualized rate by year-end 2018 – 2023(5) 12% - 15% average annual g
Slide 19: Q&A Session
Qé&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 19
Slide 20: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 20
Slide 21: NEXT@ra
NEXT@ra ENERGY &%
Slide 22: 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 2018 2019 FFO/Debt 13%-23% 21% 27% >21% Debt/EBITDA 3.5x-4.5x 3.1x <4.5x Baa Downgrade Actual Target Moody’s Range Threshold 2018 2019 CFO Pre-WC/Debt 13%-22% 18% 22% >18% CFO-Div/Debt 9%-17
Slide 23: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2019 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.01 - $0.02 • Timing of investment ± $0.03 - $0.04 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.03 - $0
Slide 24: NextEra Energy Resources Projected 2019 Portfolio Financial Information
NextEra Energy Resources Projected 2019 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Remaining Adjusted credits included in Maintenance Pre-Tax Cash Contract EBITDA(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Life (8) Existing
Slide 25: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) A 1% change in the wind production index equates to roughly 3 - 4 cents of EPS for balance of 2019 1) Represents a measure of the actual wind speeds available for energy production for the stated period relative to long-term average wind speeds; the numer
Slide 26: Energy Resources Wind Resource Variability vs. Long-Term Average
Over the last 30 years we have experienced both positive and negative variability in wind resource Energy Resources Wind Resource Variability vs. Long-Term Average(1) 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 Long-Term Average Monthly Wind Energy Index 1) Historical values represent wind energy in
Slide 27: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2017: 2017: Oliver III ND 99 Whitney Point CA 20 Golden Hills North CA 46 Marshall MN 62 Bluff Point IN 120 Westside CA 20 Cottonwood NE 90 Distributed Generation Various 97 Total 2017 Wind: 355 Total 2017 Solar: 199
Slide 28: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2017: 2019 – 2020: Blue Summit TX 30 0.5 Montauk NY 5 8.0 Total: 30 Wilmot AZ 30 4.0 Rush Springs OK 10 2.0 2018: Minuteman MA 5 2.0 Pinal AZ 10 4.0 Total: 50 Parry ON 2 4.0 Post – 2020: Elmira ON 2 4.0 D
Slide 29: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 12/31/18 $361 Amounts Realized During 1st Quarter 2 Change in Forward Prices (all positions) (368) Primary Drivers: Subtotal – Income Statement (366) Interest Rate Hedges ($420) Asset/(Liability) B
Slide 30: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 1st Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance Description 12/31/18 Realized Prices (Loss) 3/31/19 NEE Pretax gross amounts Natural gas related positions $ 653 $ 16 $ 69 $ 85 $
Slide 31: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) Gain / (Loss)(1) Asset / (Liability) Balance Total Description 3/31/19 2019 2020 2021 2022 2023 - 2047 2019 - 2047 Pretax gross amounts Natural gas related positions $ 738 $ (89) $ (67) $ (92) $ (115) $ (375) $ (738) Gas Infrastructure
Slide 32: Reconciliation of GAAP Net Income to Adjusted Earnings (Q1 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2019) Florida Pow er Gulf Energy Corporate & NextEra (m illions, except per share am ounts) & Light Pow er Resources Other Energy, Inc. Net Incom e (Loss) Attributable to NextEra
Slide 33: Reconciliation of GAAP Net Income to Adjusted Earnings (Q1 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended March 31, 2018) Florida Power Energy Corporate & (millions, except per share amounts) & Light Resources Other NextEra Energy, Inc. Net Income (Loss) Attributable to NextEra Energy, Inc. $
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 cumulative effect of adopting new accounting standards, the effects of non-qualifying hedges and unrealized ga
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.) effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historica
Slide 37: NExTera energy”
NExTera energy” PARTNERS Z
Slide 38: Reconciliation of Net Loss to Adjusted EBITDA and CAFD
Reconciliation of Net Loss to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q1 2019 Q1 2018(1) Net loss $ (121) $ (19) Add back: Depreciation and amortization 61 53 Interest expense 155 103 Income taxes (7) 19 Tax credits 108 70 Amortization of intangible assets - PPAs 9 – Eq
Slide 39: NEP Wind Production Index
NEP Wind Production Index(1)(2) A 1% change in the wind production index equates to roughly $8 - $10 MM of adjusted EBITDA for balance of 2019 1) Represents a measure of the actual wind speeds available for energy production for the stated period relative to long-term average wind speeds; the numera
Slide 40: NEP's holdco leverage target is consistent with its credit ratings
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 S&P(1) Range 2018(4) YE 2019(5) HoldCo Debt/EBITDA 4.0x - 5.0x 3.7x 4.0x - 5.0x Ba1 Actual Target Moody's(2) Range 2018(4) YE 2019(5
Slide 41: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($210-$260) ($430-$510) ($30-$35) ($5-$15) $485-$555 ($95-$105) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Trapped Unava
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.) NEP does not own all of the land on which the projects in its portfolio are located and its use and enjoyment of the property may be adversely affected to the extent that there are any lienholders or land rights holders tha
Slide 45: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP faces substantial competition primarily from regulated utilities, developers, independent power producers, pension funds and private equity funds for opportunities in North America; The natural gas pipeline industry is