Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q2 2016 Earnings Presentation
44 slides from Nextera Energy's earnings presentation, Jul 27, 2016
Slide 1: Earnings Conference Call Second Quarter 2016
Earnings Conference Call Second Quarter 2016 July 27, 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: NEE and NEP each achieved solid financial results in the second quarter
NextEra Energy and NextEra Energy Partners each achieved solid financial results in the second quarter Second Quarter 2016 Highlights • NEE grew adjusted EPS 7% over the prior-year comparable quarter – Year-to-date adjusted EPS and cash flow from operations both up 11% versus first half 2015 • Outst
Slide 4: FPL's contribution to EPS was roughly flat, down 1 cent
FPL’s contribution to EPS was roughly flat, down 1 cent from the prior-year comparable quarter Florida Power & Light Results – Second Quarter Net Income EPS ($ MM) $435 $448 $0.97 $0.96 2015 2016 2015 2016 4
Slide 5: Florida Power & Light EPS Contribution Drivers
Contributions from new investments were offset by negative impacts of the Woodford Project and share dilution Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(1) Second $B Quarter 35.0 $30.9 $33.5 FPL – 2015 EPS $0.97 30.0 Drivers: 25.0 20.0 New Investments 0.08
Slide 6: Florida's economic growth remains strong
Florida’s economic growth remains strong Florida Economy Florida Unemployment(1) Florida Consumer Sentiment(2) 12% 100 90 10% 80 June-16 8% 70 60 June-16 6% 50 40 4% 30 2% 20 10 0% 0 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-1
Slide 7: FPL's retail sales volume declined due to less weather-related usage
FPL’s retail sales volume declined from the second quarter last year due to less weather-related usage per customer Customer Characteristics (through June 2016) Retail kWh Sales Customer Growth(1,3) (Change vs. prior-year quarter) 100 (Change vs. prior-year quarter) 80 65 Customer Growth & Mix 1.2%
Slide 8: FPL submitted its formal base rate filing on March 15th
FPL submitted its formal base rate filing on March 15th Estimated FPL Rate Case Timeline March 15, July/ August/ January 2016 June August September Q4 2017 File formal Quality Intervenor, Technical Final New rate request of staff, and hearings decision rates (testimony; service FPL by PSC effective
Slide 9: Energy Resources' adjusted EPS increased 10 cents
Energy Resources’ adjusted EPS increased 10 cents from the comparable prior-year quarter Energy Resources Results(1,2) – Second Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $313 $276 $0.67 $0.61 $254 $234 $0.57 $0.50 2015 2016 2015 2016 2015 2016 2015 2016 (1) Attributable to NE
Slide 10: Energy Resources' adjusted EPS growth driven primarily by new investments
Energy Resources’ adjusted EPS growth was driven primarily by new investments Energy Resources Second Quarter Adjusted EPS(1) Contribution Drivers $0.90 $0.80 $0.19 ($0.04) ($0.02) ($0.01) ($0.02) $0.67 $0.70 $0.60 $0.57 $0.50 ($0.13)Renewables $0.40 $0.06 Gas Pipelines $0.30 $0.20 $0.10 $0.00 Q2 20
Slide 11: U.S. Federal tax incentives for renewables extended into the next decade
U.S. Federal tax incentives for completed renewables projects have been extended into the next decade U.S. Renewables Federal Tax Credits Wind Production Solar Investment Tax Credit (PTC) Tax Credit (ITC) Start of Start of Construction COD Wind Construction Solar Date Deadline PTC Date ITC(1) During
Slide 12: Optimistic about the prospects for new renewables growth
We continue to be optimistic about the prospects for new renewables growth Energy Resources Development Program(1) • ~4.0 GW 2015 – 2016 development program: – ~1.5 GW brought into service in 2015 – ~2.5 GW on track for 2016 delivery(2) • 2017 – 2018 development program: – Signed ~200 MW of US wind
Slide 13: NEP's second quarter results driven by portfolio additions
NEP’s second quarter results were driven by portfolio additions over the last year NextEra Energy Partners – Second Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $180 $68 ($4) $90 ($8) ($2) $156 $28 ($1) ($8) $160 $80 ($4) $140 $70 $65 $120 $60 $102 $50 $100 $50 $80 $40 $60 $30 $40 $20 $20 $
Slide 14: NextEra Energy's adjusted EPS increased ~7%
NextEra Energy’s adjusted earnings per share increased ~7% versus the prior-year comparable quarter NextEra Energy EPS Summary(1,2) – Second Quarter GAAP 2015 2016 Change FPL $0.97 $0.96 ($0.01) Energy Resources $0.61 $0.50 ($0.11) Corporate and Other $0.01 ($0.30) ($0.31) Total $1.59 $1.16 ($0.43)
Slide 15: 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) (1) See Appendix for definition of Adjusted Earnings expectations 15
Slide 16: 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 Unit Distributions 2016 $1.38 - $1.41 annualized rate by year end(4) 2016 - 2020 12% - 15% average annual growth(5) (1) See Appendix for definition of Adjusted
Slide 17: Q&A Session
Q&A Session NExTera’ NexTera energy” ENERGY & PARTNERS 2 17
Slide 18: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 18
Slide 19: NextEra Energy
NExTera’ ENERGY @
Slide 20: Our current credit expectations are on track
Our current credit expectations are on track Credit Expectations Actual Actual Projected S&P A- Range 2014 2015 2016 FFO/Debt 23%-35% 25% 26% 26% Debt/EBITDA 2.5x-3.5x 3.5x 3.3x 3.3x Actual Actual Projected Moody’s Baa Range 2014 2015 2016 CFO Pre-WC/Debt 13%-22% 21% 21% 22% Debt Capitalization 45%-
Slide 21: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2016 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.01 • Timing of investment ± $0.01 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.01 - $0.02 • Wind resou
Slide 22: NextEra Energy Resources Projected 2016 Portfolio Financial Information
NextEra Energy Resources Projected 2016 Portfolio Financial Information (1) Adjusted Value of pre-tax tax EBITDA by credits inlcuded in Maintenance Pre-Tax Remaining Asset Category2 adjusted EBITDA3 Debt Service 4 Capital5 Other6 Cash Flows7 Contract Life 8 NEER Contracted(9) Renewables $1,805 - $1,
Slide 23: 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 Category2 adjusted EBITDA3 Debt Service 4 Capital5 Other6 Flows7 Contract Life 8 NEER Contracted(9) Renewables $1,725 - $1,
Slide 24: Wind Production Index
Wind Production Index(1)(2) 2015 2016 2ND QTR 3RD QTR 4TH QTR 1ST QTR 2ND QTR Location MW Apr May Jun QTR MW QTR MW QTR YTD MW QTR MW Apr May Jun QTR YTD Midwest 3,066 102% 106% 79% 97% 3,066 95% 3,066 105% 100% 3,066 95% 3,054 113% 87% 105% 102% 98% West 2,931 89% 96% 79% 88% 2,931 95% 3,119 93% 89
Slide 25: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 3/31/16 $609.7 Amounts Realized During 2nd Quarter (67.2) Primary Drivers: Change in Forward Prices (all positions) (274.0) Revenue Hedges – Subtotal – Income Statement (341.2) Power, Gas & Oil Pri
Slide 26: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 2nd Quarter Asset / Hedges Asset / (Liability) Change in Total Related to (Liability) Balance Amounts Forward Unrealized Sale of Balance Description 3/31/16 Realized Prices MTM Assets (4) 6/30/16 (1) Pretax Amounts @ Share Generation Relate
Slide 27: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges(1) – Summary of Forward Maturity ($ millions, after-tax) Gain / (Loss) (2) Asset / (Liability) Balance Total Description 6/30/16 2016 2017 2018 2019 2020 - 2035 2016 - 2035 After Tax Amounts @ Share (1) Generation Related: Natural gas related positions $ 504.6 $ (73.2) $ (94.2)
Slide 28: Contracted Renewables Development Program
Contracted Renewables Development Program(1,2) Wind Location MW COD Solar Location MW COD Breckenridge 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 29: Reconciliation of Adjusted Earnings to GAAP Net Income (Q2 2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended June 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, Inc.
Slide 30: Reconciliation of Adjusted Earnings to GAAP Net Income (Q2 2015)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended June 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, Inc.
Slide 31: Reconciliation of Adjusted Earnings to GAAP Net Income (Six Months 2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Six Months Ended June 30, 2016) Florida Pow er Energy Corporate & NextEra Energy, (m illions, except per share am ounts) & Light Resources Other (1) Inc. Net Incom e (Loss) Attributable to NextEra Energy, In
Slide 32: Reconciliation of Adjusted Earnings to GAAP Net Income (Six Months 2015)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Six Months Ended June 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, Inc. $
Slide 33: 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 34: 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 35: Cautionary Statement And Risk Factors (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 36: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 37: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q2 2016 Net income $ 28 Add back: Depreciation and amortization 46 Interest expense 77 Income taxes (9) Tax credits 35 Benefits associated with differential membership interests (12) Equity in losse
Slide 38: HoldCo Debt Capacity
HoldCo Debt Capacity $1,075-$1,175 $775 $MM 3.5x $21-$31 $310-$340 $300-$400 $10-$20 $37-$41 $230-$260 Estimated Corporate IDR Fees(2) HoldCo Cash HoldCo Current Remaining (2) (2) (3) Pre-tax Expenses Interest Available Debt Balance HoldCo (1,2) (3) CAFD to Service Capacity Debt HoldCo Capacity(3) D
Slide 39: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2016 Run Rate CAFD) $750-$840(2) ($10-$20) ($40-$60) $670-$760 ($240-$260)(3) ($155-$205)(4) $ MM ($25-$30)(5) ($3-$8) $230-$290(6) Project-level Corporate IDR Adjusted Debt Service Pre-tax Non-Cash Maintenance Estimated Adjusted Expenses Fee
Slide 40: 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 41: 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 42: Cautionary Statement And Risk Factors (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 43: Cautionary Statement And Risk Factors (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 44: Cautionary Statement And Risk Factors (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