Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q3 2015 Earnings Presentation
43 slides from Nextera Energy's earnings presentation, Oct 28, 2015
Slide 1: Earnings Conference Call Third Quarter 2015
Earnings Conference Call Third Quarter 2015 October 28, 2015
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: Solid third quarter results, capping off three quarters of strong execution
Solid third quarter results, capping off three quarters of strong execution on our objectives for the full year Third Quarter 2015 Highlights • On track to finish 2015 in upper half of $5.40 to $5.70 range of adjusted EPS expectations for NextEra Energy • FPL: – Strong operating performance – Custom
Slide 4: Florida Power & Light Results – Third Quarter
FPL delivered solid earnings growth during the quarter Florida Power & Light Results – Third Quarter Net Income EPS ($ MM) $489 $1.05 $1.07 $462 2014 2015 2014 2015 4
Slide 5: Primary driver of FPL growth was continued investment in the business
The primary driver of FPL growth was continued investment in the business, partially offset by share dilution Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(1) Third $B Quarter 35.0 $31.7 FPL – 2014 EPS $1.05 30.0 $29.4 4.6 3.0 Drivers: 25.0 New Investments $0.
Slide 6: The state economy continues to progress well
The state economy continues to progress well Florida Economy Florida Unemployment(1) Florida Consumer Sentiment(2) 12% 100 90 10% 80 Sep-15 8% 70 Sep-15 60 6% 50 40 4% 30 2% 20 10 0% 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan
Slide 7: FPL’s retail sales grew 2.6% over the prior-year comparable quarter
FPL’s retail sales grew 2.6% over the prior-year comparable quarter Customer Characteristics (through September 2015) Retail kWh Sales Customer Growth(1,3) (Change vs. prior-year quarter) (Change vs. prior-year quarter) 100 Customer Growth & Mix 1.6% 80 ~67 UKU Impact # of 60 + Usage Growth Due to W
Slide 8: Energy Resources Results – Third Quarter
Energy Resources’ adjusted EPS declined 4 cents from the comparable prior-year quarter Energy Resources Results(1) – Third Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $375 $0.82 $231 $221 $0.52 $0.48 $204 $0.46 2014 2015 2014 2015 2014 2015 2014 2015 8 (1) Attributable to NEE,
Slide 9: Energy Resources Third Quarter Adjusted EPS Contribution Drivers
Energy Resources’ adjusted EPS results declined overall, but were in line with our expectations for the quarter Energy Resources Third Quarter Adjusted EPS(1) Contribution Drivers $0.70 $0.60 $0.03 $0.01 ($0.06) $0.03 ($0.05) $0.52 $0.50 $0.48 $0.40 ($0.07) Operational results of new wind and solar
Slide 10: Energy Resources 2015-2016 Development Program
Energy Resources had another excellent quarter of new renewables origination Energy Resources 2015-2016 Development Program(1) March 2015 Investor Conference(2) 2015-2016 Signed Additional Potential Total U.S. Wind 980 1,100 – 1,300 2,080 – 2,280 Canadian Wind 174 – 174 U.S. Solar 960 150 – 250 1,11
Slide 11: NextEra Energy Partners – Third Quarter
NEP is on track to achieve the distribution per unit expectations that we have shared for the year NextEra Energy Partners – Third Quarter Financial Results(1) Highlights ($ MM) • Adjusted EBITDA and cash 120 performance was slightly below $99 expectations due to lower wind 100 resource 80 • Complet
Slide 12: NextEra Energy EPS Summary – Third Quarter
NextEra Energy’s adjusted earnings per share increased 3% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Third Quarter GAAP 2014 2015 Change FPL $1.05 $1.07 $0.02 Energy Resources $0.46 $0.82 $0.36 Corporate and Other ($0.01) $0.04 $0.05 Total $1.50 $1.93 $0.43 Adjusted 201
Slide 13: NextEra Energy’s Adjusted Earnings Per Share Expectations
NextEra Energy’s Adjusted Earnings Per Share Expectations(1) Upper half of 2015 $5.40 - $5.70 2016 $5.85 - $6.35 $6.60 - $7.10 2018 (6% - 8% CAGR off a 2014 base) (1) See Appendix for definition of Adjusted Earnings expectations 13
Slide 14: NextEra Energy Partners’ Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners’ Adjusted EBITDA and CAFD Expectations(1, 2) Adjusted EBITDA CAFD 2015 $400 - $440 MM $100 - $120 MM 12/31/15 Run Rate(3) $540 - $580 MM $190 - $220 MM 12/31/16 Run Rate(4) $640 - $760 MM $210 - $290 MM Unit Distributions 2015 ~$1.23 annualized rate by year end 2016 - 2020 12
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Slide 16: Q&A Session
Qé&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 16
Slide 17: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 17
Slide 18: NExTera’
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Slide 19: Credit Expectations
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 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% 21
Slide 20: 2016 Potential Sources of Variability
Potential drivers of variability to consolidated adjusted EPS 2016 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.02 • Timing of investment ± $0.01 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.06 - $0.07 • Wind resource (± 1% d
Slide 21: Energy Resources 2017-2018 Development Program
Energy Resources expects to update its 2017-2018 development program by our first quarter earnings call next year Energy Resources 2017-2018 Development Program March 2015 Investor Conference(1) 2017-2018 Signed Additional Potential Total U.S. Wind – 750 – 850 750 – 850 Canadian Wind – – – U.S. Sola
Slide 22: NextEra Energy Resources Projected 2016 Portfolio Financial Information
NextEra Energy Resources Projected 2016 Portfolio Financial Information (1) Value of pre-tax tax Adjusted credits inlcuded in Maintenance Pre-Tax Cash Remaining EBITDA2 adjusted EBITDA3 Debt Service 4 Capital5 Other6 Flows7 Contract Life 8 NEER Contracted(9) Renewables $1,900 - $2,000 ($675 - $725)
Slide 23: Wind Production Index
Wind Production Index(1)(2) 2014 2015 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 3,066 112% 68% 93% 91% 3,066 103% 105% 3,066 101% 3,066 97% 3,066 91% 101% 94% 95% 98% West 2,730 94% 89% 91% 91% 2,931 94% 98% 2,931 81%
Slide 24: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($MM, after-tax) Asset/(Liability) Balance as of 6/30/15 $562.7 Primary Drivers: Amounts Realized During 3rd Quarter (44.5) Revenue Hedges – Power, Gas & Oil Change in Forward Prices (all positions) 202.5 Prices $246.1 Subtotal – Income Statement 158.0
Slide 25: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($MM after-tax) 1st Quarter 2nd Quarter Asset / Deals Asset / Deals Asset / (Liability) Change in Executed Total (Liability) Change in Executed Total (Liability) Balance Amounts Forward During Unrealized Balance Amounts Forward During Unrealized Balance
Slide 26: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges(1) – Summary of Forward Maturity ($MM after-tax) Gain / (Loss) (2) Asset / (Liability) Balance Total Description 9/30/15 4 Q 2015 2016 2017 2018 2019 - 2034 2015 - 2034 Generation Related: Natural gas related positions $ 511.6 $ (19.7) $ (104.0) $ (85.1) $ (58.2) $ (244.6) $ (5
Slide 27: 2015-2018 Contracted Renewables Development Program
2015-2018 Contracted Renewables Development Program(1,2) Wind Location MW COD Solar Location MW COD Breckenridge(3) OK 98 2015 Shafter(2) (3) CA 20 2015 Goshen(3) Ontario 102 2015 Adelanto I & II(3) CA 27 2015 East Durham(3) Ontario 22 2015 McCoy Solar CA 250 2016 Cedar Point JV Ontario 50 2015 Blyt
Slide 28: Reconciliation of Adjusted Earnings to GAAP Net Income (Q3 2015)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 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,
Slide 29: Reconciliation of Adjusted Earnings to GAAP Net Income (Q3 2014)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 2014) 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 30: Reconciliation of Adjusted Operating Cash flow to GAAP Operating Cash Flow
Reconciliation of Adjusted Operating Cash flow to GAAP Operating Cash Flow Actual Forecast (millions) 2014 2015 Inc/(Dec) Grow th Cash flow s from operating activities $ 5,500 $ 5,955 $ 455 8.3% FPL Clause recoveries 67 (180) Cedar Bay acquisition 520 Adjusted cash flow s from operating activities $
Slide 31: Definitional information
Definitional information NextEra Energy, Inc. Adjusted Earnings Expectations This presentation refers to adjusted earnings per share expectations. Adjusted earnings expectations exclude the unrealized mark- to-market effect of non-qualifying hedges, net OTTI losses on securities held in NextEra Ener
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 safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, bu
Slide 33: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) inability or failure to manage properly or hedge effectively the commodity risk within its portfolio; potential volatility of NextEra Energy's results of operations caused by sales of power on the spot market or on a short-
Slide 34: NExTera energy”
NExTera energy” PARTNERS Z
Slide 35: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q3 2015 Net income $ 14 Add back: Depreciation and amortization 31 Interest expense 28 Income taxes 3 Tax credits 21 Benefits associated with differential membership interests (3) NET Midstream tran
Slide 36: Reconciliation of Income Before Taxes to Adjusted EBITDA and CAFD
Reconciliation of Income Before Taxes to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) 2015E Income before income taxes $85 - $90 Less financial results of entities under common control prior to their respective acquisition dates (65 - 75) Add back: Depreciation and amortizat
Slide 37: Expected Cash Available for Distribution (12/31/2015 Run-Rate)
Expected Cash Available for Distribution(1) (12/31/2015 Run-Rate CAFD) $580-$620(2) ($15-$20) ($20-$25) $540-$580 ($220-$260)(3) ($75-$85)(4) $ MM ($20-$25)(5) ($5-$10) $190-$220(6) Project-level Corporate IDR Adjusted Debt Service Pre-tax Non-cash Maintainence Estimated Adjusted Expenses Fees EBITD
Slide 38: Expected Cash Available for Distribution (12/31/2016 Run-Rate)
Expected Cash Available for Distribution(1) (12/31/2016 Run-Rate CAFD) $720-$840(2) ($15-$25) ($40-60) $640-$760 ($265-$285)(3) ($125-$185)(4) $ MM ($20-$25)(5) ($5-$10) $210-$290(6) Project-level Corporate IDR Adjusted Debt Service Pre-tax Non-cash Maintainence Estimated Adjusted Expenses Fees EBIT
Slide 39: 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 revenue less fuel expense, project operating expenses, corporate G&A, plus other incom
Slide 40: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) 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
Slide 41: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may not be able to extend, renew or replace expiring or terminated agreements, such as its power purchase agreements (PPAs), Renewable Energy Standard Offer Program (RESOP) Contracts and FIT Contracts, at favorable rate
Slide 42: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may be unable to terminate the management services agreement among NEP, NextEra Energy Management Partners, LP (NEE Management), NEP OpCo and NEP GP (Management Services Agreement); if NEE Management terminates the Mana
Slide 43: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may fail to realize the growth prospects anticipated as a result of the NET Midstream acquisition; uncertainties associated with the NET Midstream acquisition may cause a loss of management personnel and other key emplo