Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — FY2016 Earnings Presentation
51 slides from Nextera Energy's earnings presentation, Jan 27, 2017
Slide 1: Earnings Conference Call Fourth Quarter and Full Year 2016
Earnings Conference Call Fourth Quarter and Full Year 2016 January 27, 2017
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 NEP delivered solid execution and strong financial results in 2016
NextEra Energy and NEP delivered solid execution on major initiatives and strong financial results in 2016 2016 Highlights • NextEra Energy grew adjusted EPS 8.4% from prior year • Continued delivery of outstanding customer value at FPL – Reached a fair and balanced outcome in base rate case – Compl
Slide 4: FPL's full-year contribution to EPS increased 8 cents
FPL’s full-year contribution to EPS increased 8 cents Florida Power & Light Results Fourth Quarter Full Year Net Income EPS Net Income EPS ($ MM) ($ MM) $365 $371 $0.79 $0.79 $1,727 $3.63 $3.71 $1,648 2015 2016 2015 2016 2015 2016 2015 2016 4
Slide 5: Continued investment in the business was the principal driver of growth at FPL
Continued investment in the business was the principal driver of growth at FPL Florida Power & Light EPS Contribution Drivers EPS Growth Regulatory Capital Employed(1) Fourth Full Quarter Year $B FPL – 2015 EPS $0.79 $3.63 35.0 $33.9 $31.3 Drivers: 30.0 New investments, incl clauses $0.07 $0.31 25.0
Slide 6: Milder weather caused a year-over-year decline in sales at FPL
Milder weather caused a year-over-year decline in sales at FPL Customer Characteristics (through December 2016) Retail kWh Sales Customer Growth(1,3) (Change vs. prior-year period) (Change vs. prior-year quarter) Fourth Full Quarter Year 100 Customer Growth & Mix 1.3% 1.3% 80 UKU Impact ~64 # of 60
Slide 7: Energy Resources' 2016 adjusted EPS increased 29 cents over the prior year
Energy Resources’ 2016 adjusted EPS increased 29 cents over the prior year Energy Resources Results Fourth Quarter Full Year Net Income EPS Net Income EPS ($ MM) ($ MM) $1,092 $1,125 $2.41 $2.41 GAAP: $360 $0.77 $156 $0.34 2015 2016 2015 2016 2015 2016 2015 2016 Adjusted: $1,090 $2.33 $926 $2.04 $18
Slide 8: Energy Resources' adjusted EPS growth driven by contributions from new investments
Energy Resources’ adjusted EPS growth was largely driven by contributions from new investments Energy Resources Full Year 2016 Adjusted EPS(1) Contribution Drivers $3.00 $0.17 ($0.16) $0.63 ($0.12) ($0.23) $2.50 $2.33 $2.04 ($0.08) PTC roll-off $2.00 $1.50 $0.47 Renewables $0.16 Gas pipelines $1.00
Slide 9: Outstanding opportunity set for new renewables growth
We continue to have an outstanding opportunity set for new renewables growth Energy Resources Development Program(1) • Delivered ~2.5 GW of wind and solar projects in 2016 • Added ~3.5 GW of renewables projects to backlog over the last year – ~1,300 MW of new wind and solar for delivery through 2018
Slide 10: NEP's full year results were driven by portfolio additions
NEP’s full year results were driven by portfolio additions over the last year NextEra Energy Partners – Full Year Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $800 $300 ($34) $18 $12 ($34) $139 $700 $265 ($8) ($27) $639 $250 $222 $600 $200 $500 $404 $400 $150 $126 $300 $100 $200 $50 $100 $0 $0 2015
Slide 11: NextEra Energy's adjusted EPS increased 8.4% year-over-year
NextEra Energy’s adjusted EPS increased 8.4% year-over-year NextEra Energy Results Fourth Quarter EPS Full Year EPS GAAP 2015 2016 Change GAAP 2015 2016 Change FPL $0.79 $0.79 $0.00 FPL $3.63 $3.71 $0.08 Energy Resources $0.34 $0.77 $0.43 Energy Resources $2.41 $2.41 $0.00 Corporate and Other ($0.03
Slide 12: NextEra Energy's 2017 – 2018 Adjusted Earnings Per Share Expectations
NextEra Energy’s 2017 – 2018 Adjusted Earnings Per Share Expectations(1) 2017 $6.35 - $6.85 2018 $6.80 - $7.30 (1) See Appendix for definition of Adjusted Earnings expectations 12 Note: See slide 18 for long-term Adjusted EPS growth outlook
Slide 13: NextEra Energy Partners' Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners’ Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/16 Run Rate(2) $670 - $760 MM $230 - $290 MM 12/31/17 Run Rate(3) $875 - $975 MM $310 - $340 MM (1) See Appendix for definition of Adjusted EBITDA and CAFD expectations (2) Reflects calendar year 2017 expect
Slide 14: NEP Investment Highlights
We believe NEP is a premier distribution growth company NEP Investment Highlights High-Quality Portfolio Financial Strength and Flexibility ~2.8 GW 18-Yr A3 Renewables >90% <2.0x ~1.2x Capacity(3) of Project Debt Remaining Counterparty HoldCo Coverage & Tax Equity Contract Life(1) Credit(1,2) ~4 Bcf
Slide 15: Structural modification to IDR fees
NextEra Energy and NextEra Energy Partners are announcing a structural modification to IDR fees NEP IDR Fee Modification • Where we stand today: – Based on NEP’s most recently declared distribution to current LP unitholders at an annualized rate of $1.41 per unit, IDR fees are roughly $56 million pe
Slide 16: Strategic Rationale of NEP IDR Fee Modification
The modification is centered on value creation, and is expected to benefit both NEP and NEE Strategic Rationale of NEP IDR Fee Modification Expected Benefits to NEP Expected Benefits to NEE • More cash available to • Potential increased value in NEP’s LP unitholders NEE’s investment in NEP • Fewer a
Slide 17: Extending NEP's long-term outlook for distribution growth through 2022
We are extending NEP’s long-term outlook for distribution growth by two years, through 2022 NextEra Energy Partners’ Long-Term Distribution per Unit Growth Expectations(1) Annual 12% - 15% Growth(2) $1.58-$1.62 $1.41 Q4 2016 Q4 2017E Q4 2022E (1) Represents expected fourth quarter annualized distrib
Slide 18: Extending NextEra Energy's financial expectations through 2020
We are extending NextEra Energy’s financial expectations by two years, through 2020 NextEra Energy’s Long-Term Adjusted Earnings Per Share Expectations(1) Expected 6 – 8% • CAGR of 6 – 8% through 2020, off a 2016 base • Expectations reflect the overall strength and diversity of our growth prospects
Slide 19: Q&A Session
Q&A Session NExTera’ NexTera energy” ENERGY & PARTNERS Z 19
Slide 20: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS Z 20
Slide 21: NEX Tera
NEX Tera ENERGY &
Slide 22: FPL's Base Rate Case Settlement
FPL’s settlement agreement is designed to help deliver continued outstanding customer value FPL’s Base Rate Case Settlement • Effective January 2017 through December 2020 • Retail base revenue increases according to the following schedule: – $400 MM beginning January 2017 – $211 MM beginning January
Slide 23: Credit Metrics
NextEra Energy’s credit metrics met the targets we laid out for 2016 Credit Metrics Actual Actual Actual Target S&P A- Range 2014 2015 2016 2017 FFO/Debt 23%-35% 25% 26% 27% 26% Debt/EBITDA 2.5x-3.5x 3.5x 3.3x 3.1x 3.1x Actual Actual Actual Target Moody’s Baa Range 2014 2015 2016 2017 CFO Pre- 13%-2
Slide 24: 2017 Potential Sources of Variability
Potential drivers of variability to consolidated adjusted EPS 2017 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 resource (± 1% d
Slide 25: Energy Resources' 2016 Adjusted EBITDA by Asset Category
Energy Resources’ 2016 Adjusted EBITDA by Asset Category(1) Q3 2015 Primary Expectations(2,3) Actual(3) Driver of Delta Contracted Renewables $1,900- $2,000 $1,842 Wind Resource Contracted Nuclear $330 - $350 $348 Contracted Other $210 - $290 $333 TX Pipeline earn-out adjustment Merchant ERCOT $395
Slide 26: Energy Resources Projected 2017 Portfolio Financial Information
NextEra Energy Resources Projected 2017 Portfolio Financial Information(1) Adjusted Value of pre-tax tax Remaining EBITDA by credits included in Debt Maintenance Pre-Tax Cash Contract (2) (3) (4) (5) (6) (7) (8) Asset Category adjusted EBITDA Service Capital Other Flows Life NEER (9) Contracted Rene
Slide 27: Wind Production Index
Wind Production Index(1)(2) 2015 2016 4TH QTR 1ST QTR 2ND QTR 3RD QTR 4TH QTR Location MW Oct Nov Dec QTR YTD MW QTR MW QTR MW QTR MW Oct Nov Dec QTR YTD Midwest 3,066 107% 110% 97% 105% 100% 3,066 95% 3,054 102% 3,054 96% 3,204 96% 101% 120% 106% 100% West 3,119 80% 89% 106% 93% 89% 3,205 100% 3,30
Slide 28: Wind Production Summary
The percentage of PTCs allocated to investors continued to grow in 2016 Wind Production Summary (2) (2) (2) 2011 2012 2013 2014 2015 2016 (1) Effective Capacity (MW) 8,386 8,887 10,117 10,374 11,653 12,636 Wind Production (TWh) 24.6 25.8 29.2 32.0 33.8 38.8 Implied Average Capacity Factor 34% 33% 33
Slide 29: Contracted Renewables Development Program
Contracted Renewables Development Program(1,2) Wind Location MW COD Solar Location MW COD Breckinridge OK 98 2015 Shafter CA 20 2015 Goshen Ontario 102 2015 Adelanto I & II CA 27 2015 East Durham Ontario 22 2015 McCoy Solar CA 250 2016 Cedar Point JV Ontario 50 2015 Blythe CA 110 2016 Golden Hills C
Slide 30: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) Asset/(Liability) Balance as of 9/30/16 $297.1 Amounts Realized During 4th Quarter (49.9) Primary Drivers: Change in Forward Prices (all positions) 346.0 Interest Rate Hedges $658.9 Subtotal – Income Statement 296.1 Revenue Hedge
Slide 31: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 4th Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance Amounts Forward NQH Gain / Balance (4) Description 9/30/16 Realized Prices (Loss) Other 12/31/16 (1) Pretax Amounts @ Share Generation Related: Natural gas related
Slide 32: 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 12/31/16 2017 2018 2019 2020 2021 - 2047 2017 - 2047 (1) Pretax Amounts @ Share Generation Related: Natural gas related positions $ 838.6 $ (121.0) $ (120.9) $
Slide 33: Reconciliation of Adjusted Earnings to GAAP Net Income (Q4 2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended December 31, 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 34: Reconciliation of Adjusted Earnings to GAAP Net Income (Q4 2015)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended December 31, 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 35: Reconciliation of Adjusted Earnings to GAAP Net Income (FY2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Twelve Months Ended December 31, 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 36: Reconciliation of Adjusted Earnings to GAAP Net Income (FY2015)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Twelve Months Ended December 31, 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 37: Reconciliation of Adjusted Earnings to GAAP Net Income (2005-2016)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. 2005 2016 CAGR Earnings Per Share (assum ing dilution) Attributable to NextEra Energy, Inc. $ 2.34 $ 6.25 9.34% Adjustments - pretax: Net unrealized mark-to-market losses associated w ith non-qualifying hedge
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 unrealized mark- to-market effect of non-qualifying hedges, net OTTI losses on securities held in NextEra Ener
Slide 39: 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 40: 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 41: 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 42: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 43: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q4 2016 2016 Net income $ 197 $ 357 Add back: Depreciation and amortization 54 205 Interest expense (63) 140 Income taxes 28 51 Tax credits 46 152 Benefits associated with differential membership in
Slide 44: Expected Cash Available for Distribution (12/31/16 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2016 Run Rate CAFD) $750-$840 ($10-$20) ($50-$60) $670-$760 ($250-$270)(2) ($155-$205)(3) $ MM ($25-$30)(4) ($3-$8) $230-$290(5) Project-Level Corporate IDR Fees Adjusted Debt Service Pre-Tax Tax Non-Cash Maintenance Estimated Adjusted Expens
Slide 45: Expected Cash Available for Distribution (12/31/17 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $960-$1,060 ($15-$25) ($60-$70) $875-$975 ($290-$320)(2) ($240-$280)(3) $ MM ($30-$35)(4) ($3-$8) $310-$340(5) Project-Level Corporate IDR Fees Adjusted Debt Service Pre-Tax Tax Non-Cash Maintenance Estimated Adjusted Expe
Slide 46: Under the new IDR fee structure, incremental IDR fees are only paid above $1.41
Under the new IDR fee structure, incremental IDR fees are only paid on annualized LP distributions/unit greater than $1.41 and based on a single tier of 75% LPs/25% IDRs Hypothetical IDR Fee Calculation Example(1) Example Cash Distributed Cash/Total Unit Distributed Distributable Cash Flow $850 MM $
Slide 47: 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 48: 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 49: 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 50: 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 51: 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