Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q3 2016 Earnings Presentation
40 slides from Nextera Energy's earnings presentation, Oct 31, 2016
Slide 1: Earnings Conference Call Third Quarter 2016
Earnings Conference Call Third Quarter 2016 October 31, 2016
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: NextEra Energy and NextEra Energy Partners delivered strong financial results in the third quarter
NextEra Energy and NextEra Energy Partners delivered strong financial results in the third quarter Third Quarter 2016 Highlights • NEE grew adjusted EPS ~9% over the prior-year comparable quarter • Excellent continued execution at FPL: – Proposed settlement agreement in 2016 base rate proceeding – R
Slide 4: Florida Power & Light Results – Third Quarter
FPL delivered strong earnings growth during the quarter Florida Power & Light Results – Third Quarter Net Income EPS ($ MM) $489 $515 $1.07 $1.11 2015 2016 2015 2016 4
Slide 5: The primary driver of FPL’s earnings growth was continued investment in the business
The primary driver of FPL’s earnings growth was continued investment in the business Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(1) Third $B Quarter 40.0 $34.2 FPL – 2015 EPS $1.07 35.0 $31.5 30.0 Drivers: 25.0 New Investments 0.07 20.0 Share Dilution and Ot
Slide 6: Customer growth and strong weather effects drove higher retail sales at FPL
Customer growth and strong weather effects drove higher retail sales at FPL Customer Characteristics (through September 2016) Retail kWh Sales Customer Growth(1,3) (Change vs. prior-year quarter) 100 (Change vs. prior-year quarter) 80 67 Customer Growth & Mix 1.4% # of 60 UKU Impact Customers + Usag
Slide 7: Proposed settlement agreement in 2016 base rate proceeding
Proposed settlement agreement in 2016 base rate proceeding FPL Base Rate Request Proposed Settlement • Key elements of proposed settlement effective January 2017 through December 2020: – Retail base revenue increases according to the following schedule: $400 MM beginning January 2017 $211 MM beginni
Slide 8: Energy Resources’ adjusted EPS increased 11 cents from the comparable prior-year quarter
Energy Resources’ adjusted EPS increased 11 cents from the comparable prior-year quarter Energy Resources Results(1) – Third Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $379 $0.83 $307 $0.66 $279 $0.60 $225 $0.49 2015 2016 2015 2016 2015 2016 2015 2016 (1) Attributable to NEE,
Slide 9: Energy Resources’ adjusted EPS growth was driven primarily by new investments
Energy Resources’ adjusted EPS growth was driven primarily by new investments Energy Resources Third Quarter Adjusted EPS(1) Contribution Drivers $0.90 $0.80 $0.27 ($0.09) $0.70 ($0.02) ($0.05) $0.60 $0.60 $0.49 $0.50 $0.40 $0.14 Renewables $0.13 Natural gas pipelines $0.30 $0.20 $0.10 $0.00 Q3 2015
Slide 10: We continue to have an outstanding opportunity set for new renewables growth
We continue to have an outstanding opportunity set for new renewables growth Energy Resources Development Program(1) • Announcing ~2 GW of renewables projects added to backlog – Signed contracts for ~600 MW of new wind projects since last call ~100 MW for delivery in 2017 – 2018 ~500 MW post – 2018
Slide 11: NEP’s third quarter results were driven by portfolio additions over the last year
NEP’s third quarter results were driven by portfolio additions over the last year NextEra Energy Partners – Third Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $200 $90 $11 ($10) $180 $75 ($1) $174 $80 $160 $70 $11 ($10) $140 $60 $41 ($6) $120 $51 $99 $50 $100 $40 $80 $30 $60 $40 $20 $15 $20
Slide 12: NextEra Energy’s adjusted earnings per share increased ~9% versus the prior-year comparable quarter
NextEra Energy’s adjusted earnings per share increased ~9% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Third Quarter GAAP 2015 2016 Change FPL $1.07 $1.11 $0.04 Energy Resources $0.83 $0.66 ($0.17) Corporate and Other $0.03 ($0.15) ($0.18) Total $1.93 $1.62 ($0.31) Adjus
Slide 13: Oncor Transaction Overview
NextEra Energy has announced proposed transactions with EFH, TTHC and OMI that would result in NextEra Energy owning 100% of Oncor Oncor Transaction Overview • On September 19th, received U.S. Bankruptcy Court approval for EFH to enter into merger agreements – Achieved additional creditor support fo
Slide 14: NextEra Energy’s Adjusted Earnings Per Share Expectations
NextEra Energy’s Adjusted Earnings Per Share Expectations(1) 2016 $5.85 - $6.35 $6.60 - $7.10 2018 (6% - 8% CAGR off a 2014 base)(2) (1) See Appendix for definition of Adjusted Earnings expectations (2) If approved, the company’s announced transactions with EFH, TTHC and OMI, which would result in N
Slide 15: NextEra Energy Partners’ 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 12/31/17 Run Rate(4) $875 - $975 MM $310 - $340 MM Unit Distributions 2016 $1.38 - $1.41 annualized rate by year end(5) 2016 - 2020 12% - 15% average annual gro
Slide 16: Q&A Session
Q&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 16
Slide 17: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 17
Slide 18: NExTera’
NExTera’ ENERGY @
Slide 19: NextEra Energy Resources Projected 2017 Portfolio Financial Information
NextEra Energy Resources Projected 2017 Portfolio Financial Information (1) Adjusted Value of pre-tax tax EBITDA by credits inlcuded in Maintenance Pre-Tax Cash Remaining Asset Category(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Contract Life (8) NEER Contracted(9) Renewable
Slide 20: Wind Production Index
Wind Production Index(1)(2) 2015 2016 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 3,066 91% 101% 94% 95% 3,066 105% 100% 3,066 95% 3,054 102% 3,054 98% 84% 105% 96% 98% West 2,931 95% 108% 82% 95% 3,119 93% 89% 3,205 100
Slide 21: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 6/30/16 $321.4 Amounts Realized During 3rd Quarter (60.0) Primary Drivers: Change in Forward Prices (all positions) 90.0 Revenue Hedges – Subtotal – Income Statement 30.0 Power, Gas & Oil Prices $2
Slide 22: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 3rd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance (4) Description 6/30/16 Realized Prices (Loss) Other 9/30/16 Pretax Amounts @ Share (1) Generation Related: Natural gas related p
Slide 23: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges(1) – Summary of Forward Maturity ($ millions, Pretax) Gain / (Loss) (2) Asset / (Liability) Balance Total Description 9/30/16 4th Qtr 2016 2017 2018 2019 2020 - 2047 2016 - 2047 (1) Pretax Amounts @ Share Generation Related: Natural gas related positions $ 940.1 $ (57.0) $ (160
Slide 24: Contracted Renewables Development Program
Contracted Renewables Development Program(1,2) Wind Location MW COD Solar Location MW COD Breckinridge OK 98 2015 Shafter CA 20 2015 Goshen Ontario 102 2015 Adelanto I & II CA 27 2015 East Durham Ontario 22 2015 McCoy Solar CA 250 2016 Cedar Point JV Ontario 50 2015 Blythe CA 110 2016 Golden Hills C
Slide 25: Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc.
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 2016) 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 26: Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc.
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 27: 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 28: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This earnings release 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
Slide 29: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) inability or failure by NextEra Energy Resources 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 th
Slide 30: Forward Looking Statements
Forward Looking Statements Forward-looking statements also include, but are not limited to, statements about the anticipated benefits of the proposed transactions involving NEE, EFH, TTHC, OMI and Oncor, including future financial or operating results of NEE or Oncor, NEE’s, EFH’s or Oncor’s plans,
Slide 31: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 32: Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD)
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q3 2016 Net income $ 127 Add back: Depreciation and amortization 51 Interest expense 41 Income taxes 25 Tax credits 43 Benefits associated with differential membership interests (13) Texas pipeline
Slide 33: Currently targeting a long-term capital structure utilizing Holdco leverage of approximately 3.5x
Currently targeting a long-term capital structure utilizing Holdco leverage of approximately 3.5x project distributions after debt service HoldCo Debt Capacity $1,150-$1,250 $700 $MM $450-$550 3.5x $46-$51 $20-$25 $330-$360 $260 $10-$20 Estimated Corporate IDR Fees (2) HoldCo Cash HoldCo Current Rem
Slide 34: Expected Cash Available for Distribution (December 31, 2016 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2016 Run Rate CAFD) $750-$840(2) ($10-$20) ($40-$60) $670-$760 ($250-$270)(3) ($155-$205)(4) $ MM ($25-$30)(5) ($3-$8) $230-$290(6) Project-Level Corporate IDR Fees Adjusted Debt Service Pre-Tax Tax Non-Cash Maintenance Estimated Adjusted Exp
Slide 35: Expected Cash Available for Distribution (December 31, 2017 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $1,000-$1,100(2) ($15-$25) ($90-$110) $875-$975 ($280-$310)(3) ($260-$290)(4) $ MM ($30-$35)(5) ($1-$5) $310-$340(6) Project-Level Corporate IDR Fees Adjusted Debt Service Pre-Tax Tax Non-Cash Maintenance Estimated Adjuste
Slide 36: 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 37: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This earnings release 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 Nex
Slide 38: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may incur significant costs and liabilities as a result of pipeline integrity management program testing and any necessary pipeline repair or preventative or remedial measures; The Texas pipelines’ operations could incu
Slide 39: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Acquisitions of existing clean energy projects involve numerous risks; Renewable energy procurement is subject to U.S. state and Canadian provincial regulations, with relatively irregular, infrequent and often competitive p
Slide 40: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units have limited voting rights and are not entitled to elect NEP's general partner or NEP GP’s directors; NEP's partnership agreement restricts the remedies available to holders of NEP's common uni