Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q2 2020 Earnings Presentation
48 slides from Nextera Energy's earnings presentation, Jul 24, 2020
Slide 1: Earnings Conference Call Second Quarter 2020
Earnings Conference Call Second Quarter 2020 July 24, 2020
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results These presentations include 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: NextEra Energy delivered strong second quarter results while managing COVID-19 impacts
NextEra Energy delivered strong second quarter results while managing the ongoing impacts of the COVID-19 pandemic NextEra Energy Highlights • NEE grew adjusted EPS by ~11% year-over-year • Continued strong execution at FPL – T&D systems and generating fleet continue to perform in line with typicall
Slide 4: FPL's earnings per share increased 15 cents from the prior-year quarter
FPL’s earnings per share increased 15 cents from the prior- year comparable quarter Florida Power & Light Results – Second Quarter Net Income EPS ($ MM) $749 $1.52 $663 $1.37 2019 2020 2019 2020 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) Second Quarter $B $45.0 FPL – 2019 EPS $1.37 $39.9 $40.0 $36.2 Drivers: $35.0 New invest
Slide 6: Gulf Power's contribution declined slightly due to COVID-19 expenses and weather
Gulf Power’s contribution declined slightly as a result of COVID-19 related expenses and unfavorable weather Gulf Power Results – Second Quarter Results Regulatory Capital Employed(1) (Excluding Accumulated Deferred Income Taxes) $B $4.5 $3.9 $3.2 $3.0 Q2 2019 Q2 2020 GAAP $1.5 Net Income $45 MM $55
Slide 7: The Florida economy is reflecting the impacts of the COVID-19 pandemic
The Florida economy is reflecting the impacts of the COVID-19 pandemic Florida Economy Florida Unemployment & Labor Participation Rates(1) Florida Consumer Sentiment(2) 16% 64% 110 14% 62% 100 12% 60% 90 10% 58% Labor 8% Participation 56% 80 Rate 6% (Right Axis) 54% 70 4% 52% 60 2% 50% 0% 48% 50 1/1
Slide 8: FPL and Gulf Power had strong customer growth but a decline in usage per customer
FPL and Gulf Power had continued strong customer growth but a decline in underlying usage per customer Customer Characteristics FPL Retail kWh Sales FPL Growth(1,2) (Change vs. prior-year period) (Change vs. prior-year quarter) 74.5 100 Second Vero Impact 80 Quarter # of 60 UKU Impact Customer Growt
Slide 9: Energy Resources' adjusted EPS increased ~14% from the prior-year quarter
Energy Resources’ adjusted EPS increased ~14% from the prior-year comparable quarter Energy Resources Results(1) – Second Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $672 $1.39 $531 $1.08 $459 $0.95 $481 $0.97 2019 2020 2019 2020 2019 2020 2019 2020 1) Attributable to NEE; prio
Slide 10: Energy Resources' growth driven by new investments, existing generation and Transmission
Energy Resources’ strong growth was driven by contributions from new investments, existing generation assets and NextEra Energy Transmission Energy Resources Second Quarter Adjusted EPS(1) Contribution Drivers $1.20 $0.03 $0.00 ($0.04) $0.05 $0.01 $1.08 $0.08 $1.00 $0.95 $0.80 $0.60 $0.40 $0.20 $0.0
Slide 11: Energy Resources had another strong quarter of origination success
Energy Resources had another strong quarter of origination success Energy Resources Development Program(1) • 1,730 MW added to backlog – 708 MW of wind – 844 MW of solar – 178 MW of battery storage • Executed build-own-transfer agreement for a 200 MW solar project not included in backlog 2019 – 2020
Slide 12: NextEra Energy's adjusted EPS increased ~11% versus the prior-year quarter
NextEra Energy’s adjusted earnings per share increased ~11% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Second Quarter GAAP 2019 2020 Change FPL $1.37 $1.52 $0.15 Gulf Power $0.09 $0.11 $0.02 Energy Resources $1.39 $0.97 ($0.42) Corporate and Other ($0.29) ($0.01) $0.28
Slide 13: Well positioned to continue strong adjusted EPS growth
We remain well positioned to continue our strong adjusted EPS growth NextEra Energy’s Adjusted Earnings Per Share Expectations • Expect 6% - 8% growth $10.00 - through 2021 off our 2018 base $9.40 - $10.75 of $7.70, plus the expected $8.70 - $9.95 accretion from the Florida $9.20 acquisitions of $0.
Slide 14: NextEra Energy Partners delivered strong operational and financial performance
NextEra Energy Partners delivered another quarter of strong operational and financial performance NextEra Energy Partners Highlights • Achieved adjusted EBITDA and CAFD growth of 23% and 46%, respectively – Year-to-date growth of 26% and 86%, respectively • Following successful resolution of PG&E ba
Slide 15: NEP's growth driven by new and existing projects
NEP’s strong year-over-year growth was driven by contributions from new and existing projects NextEra Energy Partners – Second Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $400 $200 $17 ($5) $2 $349 $35 ($5) ($14) $350 $51 $180 $166 $160 $300 $284 $36 $140 $250 $120 $114 $200 $100 $150 $80
Slide 16: NEP well positioned to deliver on growth objectives
NEP remains well positioned to deliver on its growth objectives and does not expect to need any acquisitions until 2022 NextEra Energy Partners Adjusted EBITDA and CAFD Expectations Adjusted EBITDA CAFD 12/31/20 Run Rate(1) $1,225 – $1,400 MM $560 – $640 MM Unit Distributions 2020(2) $2.40 - $2.46 a
Slide 17: Q&A Session
Qé&A Session NExTera’ NexTera energy” ENERGY & PARTNERS Z 17
Slide 18: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS Z 18
Slide 19: NEXT@ra
NEXT@ra ENERGY &%
Slide 20: FPL usage per customer improved as stay-at-home orders were lifted
During the second quarter, weather-normalized usage per customer improved as stay-at-home orders were lifted FPL – Usage per Customer Variance vs. Expectations 6.9% 4.0% 3.9% 1.0% (0.9%) (1.6%) (3.1%) (3.9%) (1) (1) April May June July MTD Weather-Normalized Usage Actual Usage 1) Preliminary data; J
Slide 21: Gulf Power usage per customer improved as stay-at-home orders were lifted
During the second quarter, weather-normalized usage per customer improved as stay-at-home orders were lifted Gulf Power – Usage per Customer Variance vs. Expectations 1.2% 0.7% 0.6% 0.1% (2.1%) (2.7%) (3.1%) (6.1%) (1) (1) April May June July MTD Weather-Normalized Usage Actual Usage 1) Preliminary
Slide 22: Well-positioned to withstand potential changes in load from COVID-19
NextEra Energy is well-positioned to withstand potential changes in load from the COVID-19 pandemic Full Year Sales & Usage Sensitivities (1) (1)(2) Commentary Retail Sales Composition Impact of 1% Change in Sales • Reserve amortization provides flexibility to offset changes in usage kWh Revenues Re
Slide 23: NextEra Energy maintains its strong liquidity position
NextEra Energy maintains its strong liquidity position NextEra Energy’s Liquidity Position(1) Liquidity as of 6/30/2020 • Largest core credit facility, with ($ B) most credit providers in the industry(3) $13.9 ($1.1) – Core FPL, Gulf and NEECH credit $12.8 ($0.8) $1.0 $13.0 facilities mature Februar
Slide 24: 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 2019(1) 2020 FFO/Debt 13%-23% 21% 22.8% >21% Debt/EBITDA 3.5x-4.5x 3.6x <4.5x Baa Downgrade Actual Target Moody’s Range Threshold 2019(1) 2020 CFO Pre-WC/Debt 13%-22% 18% 19.9% >18% CFO-Div/
Slide 25: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2020 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume)(2) ± $0.01 - $0.02 • Timing of investment(3) ± $0.02 - $0.03 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.0
Slide 26: NextEra Energy Resources Projected 2020 Portfolio Financial Information
NextEra Energy Resources Projected 2020 Portfolio Financial Information(1) (includes NEER's share of NEP assets) Value of pre-tax tax Maintenance Adjusted credits included in Capital and Pre-Tax Cash Remaining (2) (3) EBITDA adjusted EBITDA Debt Service(4) Other (5) Flows (6) Contract Life (7) NEER
Slide 27: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) A 1% change in the wind production index equates to 2 - 3 cents of EPS for the balance of 2020 1) Represents a measure of the actual wind speeds available for energy production for the stated period relative to long-term average wind speeds; the numerator
Slide 28: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW Solar Location MW 2019: 2019: 2021-2022 (cont.): Emmons-Logan ND 216 Quitman GA 150 Excelsior NY 280 Crowned Ridge I SD 200 Shaw Creek SC 75 Trelina NY 80 Blue Summit III TX 201 Dougherty GA 120 Watkins Glen NY 50 Sh
Slide 29: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019: Post – 2022: Montauk NY 3 8.0 Proxima CA 5 4.0 Minuteman MA 5 2.0 Alabama Power AL 240 2.0 Total 2019: 8 Sonoran AZ 250 4.0 Storey AZ 88 3.0 2020: CT DEEP CT 3 2.0 Skeleton Creek OK 200 4.0 Rush Spr
Slide 30: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 3/31/20(2) ($616) Amounts Realized During 2nd Quarter (78) Primary Drivers: Electricity related ($79) Change in Forward Prices (all positions) (49) hedges Subtotal – Income Statement (127) Gas Infr
Slide 31: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 2nd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance Description 3/31/20 (2) Realized Prices (Loss) Other (4) 6/30/20 Pretax amounts at share Electricity related positions $ 873 $ (1
Slide 32: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) (1) Gain / (Loss) Asset / (Liability) Balance Total Description 6/30/20 2020 2021 2022 2023 2024 - 2047 2020 - 2047 Pretax amounts at share (1) Electricity related positions $ 784 $ (51) $ (127) $ (139) $ (82) $ (385) $ (784) Gas Infra
Slide 33: Reconciliation of GAAP Net Income to Adjusted Earnings (Q2 2020)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended June 30, 2020) Florida Power Gulf Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Power Resources Other Inc. Net Income (Loss) Attributable to NextEra Energ
Slide 34: Reconciliation of GAAP Net Income to Adjusted Earnings (Q2 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended June 30, 2019) Florida Power Gulf Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Power Resources Other Inc. Net Income (Loss) Attributable to NextEra Energ
Slide 35: Gulf Power – Year Over Year O&M Comparison
Gulf Power – Year Over Year O&M Comparison Six Months Six Months Six Months vs. 2019 vs. 2018 GAAP O&M ($ Millions) Ending June 30, Ending June 30, Ending June 30, 2018 2019 2020 Decrease Decline Decrease Decline Other Operations $166 $130 $127 $ (3) (2%) $ (39) (24%) and Maintenance Storm Accruals
Slide 36: 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 37: 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 38: 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 risk management tools associated with its hedging and trading procedures to
Slide 39: NextEra Energy Partners
NExTera energy’ PARTNERS Z
Slide 40: Reconciliation of Net Loss to Adjusted EBITDA and CAFD
Reconciliation of Net Loss to Adjusted EBITDA and Cash Available for Distribution (CAFD) YTD YTD (millions) Q2 2020 Q2 2019 Q2 2020 Q2 2019 Net Income (loss) $ 127 $ (124) $ (593) $ (244) Add back: Depreciation and amortization 66 63 133 124 Interest expense (16) 207 823 362 Income taxes 13 (10) (62
Slide 41: NEP Wind Production Index
NEP Wind Production Index(1)(2) A 1% change in the wind production index equates to $5 - $7 MM of adjusted EBITDA for the balance of 2020 1) Represents a measure of the actual wind speeds available for energy production for the stated period relative to long-term average wind speeds; the numerator i
Slide 42: NEP's strong liquidity position provides flexibility
NEP’s strong liquidity position provides flexibility in executing its long-term growth objectives NextEra Energy Partners’ Liquidity Position Liquidity as of 6/30/2020 ($ MM) • $1.25 B revolving credit facility $1,250 ($550) matures in February 2025 – 26 banks participating • $300 MM convertible deb
Slide 43: NEP's credit metrics remain on track
NEP’s credit metrics remain on track Credit Metrics BB Downgrade Actual Target S&P(1) Range Threshold 2019(4) YE 2020(4) HoldCo Debt/EBITDA 4.0x - 5.0x 5.0x 5.1x 4.0x - 5.0x Ba1 Downgrade Actual Target Moody's(2) Range Threshold 2019(4) YE 2020(4) Total Consolidated Debt/EBITDA <7.0x >7.0x 6.1x 4.5x
Slide 44: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2020 Run Rate CAFD; $ MM) $1,370-$1,540 ($20-$30) ($110-$120) $1,225-$1,400 ($165-$215) ($430-$510) ($40-$45) ($5-$15) $560-$640 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Tax Non-Cash Maintenance Estimated Adjusted EBITDA Expense
Slide 45: 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 46: 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 47: 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 power purchase agreements (PPA), natural gas transportation agreements or other customer contracts at favorable rates or on a long-term basis; If the en
Slide 48: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's ability to make distributions to its unitholders depends on the ability of NEP OpCo to make cash distributions to its limited partners; If NEP incurs material tax liabilities, NEP's distributions to its unitholders ma