Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — FY2019 Earnings Presentation
51 slides from Nextera Energy's earnings presentation, Jan 24, 2020
Slide 1: Earnings Conference Call Fourth Quarter and Full Year 2019
Earnings Conference Call Fourth Quarter and Full Year 2019 January 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 financial and operational results in 2019
NextEra Energy delivered strong financial and operational results in 2019 NextEra Energy 2019 Highlights • Achieved adjusted EPS of $8.37, up ~8.7% from prior year • Outstanding execution and customer value proposition at FPL – Excellent progress on major capital initiatives, growing regulatory capi
Slide 4: In the first year of ownership, NextEra Energy successfully executed on its strategy at Gulf Power
In the first year of ownership, NextEra Energy successfully executed on its strategy at Gulf Power Gulf Power 2019 Execution Summary Operational Regulatory Cost Effectiveness(1) Capital Employed(2) $/Retail MWh ~$32 ~$3.3 B ~20% ~11% Reduction ~$3.0 B Increase Good ~$25 2018 2019 2018 2019 1) GAAP O
Slide 5: Execution of our plans at Gulf Power generated significant value creation
Execution of our plans at Gulf Power generated significant value creation for our customers and our shareholders in 2019 Gulf Power 2019 Execution Summary Service OSHA Adjusted Reliability(1) Recordable Rate(2) Earnings(3) (Minutes) ($ MM) ~101 ~1.84 $200 ~81 $160 ~1.15 Good ~20% Good ~40% 25% Impro
Slide 6: NextEra Energy Partners had a terrific year of execution in 2019
NextEra Energy Partners had a terrific year of execution in 2019 NextEra Energy Partners 2019 Highlights • Grew distributions per unit by 15% from prior year • Achieved year-end run rate adjusted EBITDA range in excess of original expectations • Delivered year-end run rate CAFD(1) representing ~60%
Slide 7: FPL's full-year contribution to EPS increased 26 cents
FPL’s full-year contribution to EPS increased 26 cents Florida Power & Light Results Fourth Quarter Full Year Net Income EPS Net Income EPS ($ MM) ($ MM) $2,334 $4.81 $407 $400 $0.85 $2,171 $4.55 $0.81 2018 2019 2018 2019 2018 2019 2018 2019 7
Slide 8: 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) $B Fourth Full $40.0 Quarter Year $36.4 $35.0 $33.6 FPL – 2018 EPS $0.85 $4.55 $30.0 Dri
Slide 9: Gulf Power contributed adjusted EPS of 41 cents before financing costs
Gulf Power contributed adjusted EPS of 41 cents before accounting for financing costs reflected at Corporate & Other Gulf Power Results Results(1) Highlights • Achieved regulatory ROE of GAAP Adjusted ~10.8% for 12 months ending December 2019 Fourth Quarter: – For 2020, expect to be near the Net Inc
Slide 10: Florida's economic growth remains strong
Florida’s economic growth remains strong Florida Economy Florida Unemployment & Labor Participation Rates(1) Florida Consumer Sentiment(2) 12% 63% 110 10% 100 Labor 62% Participation 8% Rate 90 (Right Axis) 61% 6% 80 60% 4% 70 2% 59% 60 0% 58% 50 Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-1
Slide 11: FPL had continued strong customer growth; Gulf Power customer growth increased slightly
FPL had continued strong customer growth; Gulf Power customer growth increased slightly as it moves beyond the impacts of Hurricane Michael Customer Characteristics FPL Retail kWh Sales FPL Growth(1,2) (Change vs. prior-year period) (Change vs. prior-year quarter) 98.8 100 Fourth Full Vero Impact Qu
Slide 12: Energy Resources' full year adjusted EPS increased ~11% over the prior year
Energy Resources’ full year adjusted EPS increased ~11% over the prior year Energy Resources Results(1) Fourth Quarter Full Year Net Income EPS Net Income EPS ($ MM) ($ MM) $433 $0.88 GAAP: $4,704 $9.82 $264 $0.55 $1,807 $3.72 2018 2019 2018 2019 2018 2019 2018 2019 $323 $326 $1,695 $3.49 $0.67 $0.6
Slide 13: Energy Resources' adjusted EPS growth driven by contributions from new investments
Energy Resources’ adjusted EPS growth was primarily driven by contributions from new investments Energy Resources Full Year 2019 Adjusted EPS(1) Contribution Drivers $4.00 $0.05 $0.04 ($0.39) $0.55 ($0.03) $0.13 $3.49 $3.50 $3.14 $3.00 ($0.14) Refinancing activity $2.50 $2.00 $1.50 $1.00 $0.50 $0.00
Slide 14: Energy Resources had another strong year of origination success
Energy Resources had another strong year of origination success Energy Resources Development Program(1) • Added ~5,800 MW to renewables backlog – Includes ~1,400 MW of wind repowering, ~900 MW of battery storage and ~100 MW of build-own-transfer (BOT) projects with O&M agreements • Added ~200 MW of
Slide 15: NextEra Energy's adjusted earnings per share increased ~8.7% year-over-year
NextEra Energy’s adjusted earnings per share increased ~8.7% year-over-year NextEra Energy EPS Summary(1) Fourth Quarter EPS Full Year EPS GAAP 2018 2019 Change GAAP 2018 2019 Change FPL $0.85 $0.81 ($0.04) FPL $4.55 $4.81 $0.26 Gulf Power - $0.05 $0.05 Gulf Power - $0.37 $0.37 Energy Resources $0.5
Slide 16: We remain well positioned to continue our 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 - $10.75 through 2021 off our 2018 base $9.40 - $9.95 of $7.70, plus the expected $8.70 - $9.20 accretion from the Florida $8.37 acquisitions
Slide 17: NEP's strong full year results driven primarily by contributions from new projects
NEP’s strong full year results driven primarily by contributions from new projects NextEra Energy Partners – Full Year Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $1,350 $550 $358 ($103) $161 ($57) $1,200 ($12) ($14) ($6) $1,104 $500 $450 ($5) ($14) $1,050 ($16) $408 ($42) $400 $900 $881 $366 $350
Slide 18: NEP does not expect to need any further asset acquisitions until 2021
NEP does not expect to need any further asset acquisitions until 2021 to achieve its targeted distribution growth expectations NextEra Energy Partners Adjusted EBITDA and CAFD Expectations Adjusted CAFD(4) CAFD EBITDA(3) (Including (Excluding Desert PG&E-Related) Sunlight CAFD) 12/31/19 Run Rate(1)
Slide 19: Q&A Session
Qé&A Session NeExTera’ NexTera energy" ENERGY & PARTNERS 19
Slide 20: Appendix
Appendix NeExTera’ NexTera energy" ENERGY & PARTNERS 20
Slide 21: NextEra Energy
NExTera’ ENERGY 2
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 2019(1) 2020 FFO/Debt 13%-23% 21% 22.5% >21% Debt/EBITDA 3.5x-4.5x 3.7x <4.5x Baa Downgrade Actual Target Moody’s Range Threshold 2019(1) 2020 CFO Pre-WC/Debt 13%-22% 18% 19.6% >18% CFO-Div/
Slide 23: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS 2020 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.02 - $0.03 • Timing of investment ± $0.03 - $0.04 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.04 - $0.05 • Texas
Slide 24: Energy Resources' 2019 Adjusted EBITDA by Asset Category
Energy Resources’ 2019 Adjusted EBITDA by Asset Category(1,2) 2019 Expectations 2019 Actual (3) as of Q4 2018 EBITDA(4) Primary Driver of Delta NEER Existing Assets Contracted Renewables $2,600 - $2,700 $ 2,619 Contracted Nuclear $525 - $575 585 Favorable operations Natural Gas Pipelines $295 - $345
Slide 25: NextEra Energy Resources Projected 2020 Portfolio Financial Information
NextEra Energy Resources Projected 2020 Portfolio Financial Information(1) (includes NEER's share of NEP assets) Value of pre-tax tax Maintenance Remaining Adjusted credits included in Capital and Pre-Tax Cash Contract EBITDA(2) adjusted EBITDA(3) Debt Service (4) Other(5) Flows(6) Life (7) NEER Exi
Slide 26: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2018 2019 4TH QTR 1ST QTR 2ND QTR 3RD QTR 4TH QTR Location MW Oct Nov Dec QTR YTD MW QTR MW QTR MW QTR MW Oct Nov Dec QTR YTD Midwest 3,847 90% 83% 92% 88% 93% 3,847 93% 3,744 91% 3,742 96% 3,741 108% 92% 100% 100% 95% West 3,286 95% 88% 95% 93% 100% 3,28
Slide 27: The percentage of PTCs allocated to tax equity investors has continued to grow
The percentage of PTCs allocated to tax equity investors has continued to grow Wind Production Summary 2013 2014(2) 2015(2) 2016(2) 2017(2) 2018(2) 2019(2) Effective Capacity (MW)(1) 10,117 10,374 11,653 12,636 13,986 13,843 15,013 Wind Production (TWh) 29.2 32.0 33.8 38.8 44.2 44.5 48.6 Implied Ave
Slide 28: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW Solar Location MW 2019: 2019: Post – 2022: Emmons-Logan ND 216 Quitman GA 150 Proxima CA 50 Crowned Ridge I SD 200 Shaw Creek SC 75 Skeleton Creek OK 250 Blue Summit III TX 201 Dougherty GA 120 Chariot NH 50 Sholes N
Slide 29: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019: Post – 2022: Montauk NY 5 8.0 Proxima CA 5 4.0 Minuteman MA 5 2.0 Alabama Power AL 240 2.0 Total 2019: 10 Sonoran AZ 250 4.0 2020: Storey AZ 88 3.0 Rush Springs OK 10 2.0 CT DEEP CT 3 5.0 Distribute
Slide 30: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) 1) Includes NextEra Energy’s share of contracts at consolidated projects and equity method investees 2) Adjustment for NEER ownership changes in NEP and rounding 30
Slide 31: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 4th Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance (3) Description 9/30/19 Realized Prices (Loss) Other 12/31/19 Pretax Amounts Gross Natural gas related positions $ 804 $ (14) $ (
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 12/31/19 2020 2021 2022 2023 2024 - 2047 2020 - 2047 Pretax gross amounts Natural gas related positions $ 767 $ (98) $ (107) $ (117) $ (68) $ (377) $ (767) Gas Infrastruct
Slide 33: Reconciliation of GAAP Net Income to Adjusted Earnings (Q4 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended December 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 Next
Slide 34: Reconciliation of GAAP Net Income to Adjusted Earnings (Q4 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Three Months Ended December 31, 2018) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc.
Slide 35: Reconciliation of GAAP Net Income to Adjusted Earnings (Twelve Months 2019)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Twelve Months Ended December 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 Nex
Slide 36: Reconciliation of GAAP Net Income to Adjusted Earnings (Twelve Months 2018)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Twelve Months Ended December 31, 2018) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc
Slide 37: Reconciliation of GAAP Net Income to Adjusted Earnings (2004–2019 EPS)
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. 2004 2019 CAGR Earnings Per Share (assum ing dilution) Attributable to NextEra Energy, Inc. $ 2.48 $ 7.76 7.9% Adjustments - pretax: Net losses (gains) associated w ith non-qualifying hedges 0.01 1.12 Change
Slide 38: 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 39: 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 40: Cautionary Statement And Risk Factors That May Affect Future Results (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 41: NextEra Energy Partners
NeExTera energy’ PARTNERS Z
Slide 42: Reconciliation of Net Income (Loss) to Adjusted EBITDA and CAFD (Q4)
Reconciliation of Net Income (Loss) to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions)- Q4 2019 Q4 2018 Net income (loss) $ 83 $ (117) Add back: Depreciation and amortization 67 51 Interest expense (33) 155 Income taxes 9 (7) Tax credits 120 68 Amortization of intangible assets
Slide 43: Reconciliation of Net Income (Loss) to Adjusted EBITDA and CAFD (YTD)
Reconciliation of Net Income (Loss) to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions)- YTD 2019 YTD 2018 Net income (loss) $ (404) $ 267 Add back: Depreciation and amortization 259 203 Interest expense 702 248 Income taxes (26) 6 Tax credits 465 271 Gains on disposal of Canadi
Slide 44: NEP Wind Production Index
NEP Wind Production Index(1)(2) 2018 2019 4TH QTR 1ST QTR 2ND QTR 3RD QTR 4TH QTR Location MW Oct Nov Dec QTR YTD MW QTR MW QTR MW QTR MW Oct Nov Dec QTR YTD Midwest 793 99% 87% 94% 93% 92% 793 93% 1,213 95% 1,213 96% 1,213 108% 97% 96% 100% 96% West 1,104 92% 88% 95% 92% 100% 1,104 81% 1,104 93% 1,
Slide 45: 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(5) HoldCo Debt/EBITDA 4.0x - 5.0x 5.25x 5.1x 4.0x - 5.0x Ba1 Downgrade Actual Target Moody's(2) Range Threshold 2019(4) YE 2020(5) Total Consolidated Debt/EBITDA <7.0x >7.0x 6.1x 4.5
Slide 46: Expected Cash Available for Distribution (2019 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD; $ MM) $1,350-$1,525 ($20-$30) ($90-$100) $1,225-$1,400 ($175-$225) ($420-$500) ($40-$45) ($5-$15) $560-$640 ($52-$56) $505-$585 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Tax Non-Cash Maintenance Estimated Dese
Slide 47: Expected Cash Available for Distribution (2020 Run Rate)
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 ($55-$59) $505-$585 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Tax Non-Cash Maintenance Estimated Des
Slide 48: 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 49: 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 50: Cautionary Statement And Risk Factors That May Affect Future Results (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 51: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's financial condition and ability to make distributions to its unitholders, as well as its ability to grow distributions in the future, is highly dependent on NEER’s performance of its obligations to return all or a por