Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Q3 2018 Earnings Presentation
47 slides from Nextera Energy's earnings presentation, Oct 23, 2018
Slide 1: Earnings Conference Call Third Quarter 2018
Earnings Conference Call Third Quarter 2018 October 23, 2018
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 d
Slide 3: NextEra Energy achieved strong financial results in the third quarter
NextEra Energy achieved strong financial results in the third quarter NextEra Energy Third Quarter 2018 Highlights • NEE grew adjusted EPS ~18% versus the prior comparable quarter – ~14% increase year-to-date versus 2017 • Continued strong execution at FPL – Achieved 2018 target regulatory ROE of 11
Slide 4: FPL's earnings per share increased 18 cents from the prior-year comparable quarter
FPL’s earnings per share increased 18 cents from the prior- year comparable quarter Florida Power & Light Results – Third Quarter Net Income EPS ($ MM) $654 $1.37 $566 $1.19 2017 2018 2017 2018 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) Third $B Quarter 35.0 $33.9 FPL – 2017 EPS $1.19 $30.0 30.0 Drivers: 25.0 Investments $0
Slide 6: Florida's economy remains strong
Florida’s economy remains strong Customer Characteristics & Florida Economy Retail kWh Sales Customer Growth(1,2) (Change vs. prior-year quarter) (Change vs. prior-year quarter) 100 Customer Growth & Mix 0.9% 80 # of 60 58.1 + Usage Change Due to Weather -4.1% Customers UKU Impact (000’s) 40 + Under
Slide 7: Energy Resources' adjusted EPS increased ~18% from the prior-year comparable quarter
Energy Resources’ adjusted EPS increased ~18% from the prior-year comparable quarter Energy Resources Results(1) – Third Quarter GAAP Adjusted Net Income EPS Net Income EPS ($ MM) ($ MM) $348 $0.73 $292 $0.62 $292 $0.62 $214 $0.44 2017 2018 2017 2018 2017 2018 2017 2018 1) Attributable to NEE, see A
Slide 8: Energy Resources' adjusted EPS growth was primarily driven by lower income tax rates
Energy Resources’ adjusted EPS growth was primarily driven by lower income tax rates Energy Resources Third Quarter Adjusted EPS(1) Contribution Drivers $1.00 $0.90 $0.80 $0.11 ($0.05) $0.73 $0.70 $0.04 $0.62 $0.01 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 Q3 2017 Existing Generation Gas Lower Incom
Slide 9: Energy Resources had a record quarter of wind and solar origination
Energy Resources had a record quarter of wind and solar origination Energy Resources Development Program(1) • 1,417 MW of new renewables projects added to backlog – 850 MW of wind, 447 MW of solar and 120 MW of storage • ~650 MW of repowering projects added to backlog • Additional 200 MW build-own-t
Slide 10: NextEra Energy's adjusted earnings per share increased ~18%
NextEra Energy’s adjusted earnings per share increased ~18% versus the prior-year comparable quarter NextEra Energy EPS Summary(1) – Third Quarter GAAP 2017 2018 Change FPL $1.19 $1.37 $0.18 Energy Resources $0.62 $0.44 ($0.18) Corporate and Other ($0.02) $0.29 $0.31 Total $1.79 $2.10 $0.31 Adjusted
Slide 11: We remain well positioned to achieve the $7.70 target adjusted EPS for 2018
We remain well positioned to achieve the $7.70 target adjusted EPS for 2018 as well as our long-term financial expectations NextEra Energy’s Adjusted Earnings Per Share Expectations(1) $9.40 - • The Gulf Power, Florida City $8.70 - $9.95 Gas, and two natural gas $8.00 - $9.20 power plant acquisition
Slide 12: NEP delivered strong financial results and continued solid execution
NEP delivered strong financial results and continued solid execution against its growth initiatives NextEra Energy Partners Third Quarter 2018 Highlights • Achieved adjusted EBITDA and CAFD(1) growth of 14% and 72%, respectively, primarily driven by growth in the underlying portfolio – CAFD also ben
Slide 13: NEP delivered strong third quarter results driven by new projects
NEP delivered strong third quarter results driven primarily by contributions from new projects NextEra Energy Partners – Third Quarter Drivers(1) Adjusted EBITDA CAFD ($ MM) ($ MM) $250 $100 $17 ($3) ($13) $45 ($18) ($1) ($3) $2 $203 $81 $200 $80 $5 $28 $178 $150 $60 $47 $100 $40 $50 $20 $0 $0 Q3 20
Slide 14: NextEra Energy Partners – Financing Update
The transactions executed this quarter further enhance NEP’s substantial financing flexibility going forward NextEra Energy Partners – Financing Update(1) • Convertible equity portfolio financing – BlackRock pays $750 MM in exchange for an equity interest in the acquisition portfolio – Initial effec
Slide 15: NextEra Energy Partners Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/18 Run Rate(2) $1,000 – $1,150 MM $360 – $400 MM 12/31/19 Run Rate(3) $1,200 – $1,375 MM $410 – $480 MM Unit Distributions 2018(4) $1.81 - $1.86 annualized rate by year-end 2017 – 2023(5) 12% - 15% average an
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 Energy
NExTera’ ENERGY @
Slide 19: 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 2017 2018(2) FFO/Debt 23%-35% 23% 26% / 29%(1) 28% Debt/EBITDA 2.5x-3.5x 3.0x 3.0x Baa Downgrade Actual Target Moody’s Range Threshold 2017 2018(2) CFO Pre-WC/Debt 13%-22% 20% 22% 23% CFO-Di
Slide 20: Potential drivers of variability to consolidated adjusted EPS
Potential drivers of variability to consolidated adjusted EPS Balance of 2018 Potential Sources of Variability(1) Florida Power & Light • Wholesale (primarily volume) ± $0.00 - $0.01 • Timing of investment ± $0.00 - $0.01 NextEra Energy Resources • Natural gas prices (± $1/MMBtu change) ± $0.00 - $0
Slide 21: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2017 2018 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 3,039 83% 72% 92% 83% 3,189 107% 100% 3,637 101% 3,637 87% 3,637 90% 93% 97% 94% 94% West 3,302 89% 97% 87% 91% 3,302 100
Slide 22: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2017: 2017: Oliver III ND 99 Whitney Point CA 20 Golden Hills North CA 46 Marshall MN 62 Bluff Point IN 120 Westside CA 20 Cottonwood NE 90 Distributed Generation Various 97 Total 2017 Wind: 355 Total 2017 Solar: 199
Slide 23: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2017: 2019 – 2020: Blue Summit TX 30 0.5 Valencia CA 10 4.0 Total: 30 Wilmot AZ 30 4.0 Rush Springs OK 10 2.0 2018: Minuteman MA 5 2.0 Pinal AZ 10 4.0 Total: 55 Parry ON 2 4.0 Elmira ON 2 4.0 Post – 2020:
Slide 24: NextEra Energy Resources Projected 2018 Portfolio Financial Information
NextEra Energy Resources Projected 2018 Portfolio Financial Information (1) (includes NEER's share of NEP assets) Value of pre-tax tax Adjusted credits included in Maintenance Pre-Tax Cash Remaining EBITDA(2) adjusted EBITDA(3) Debt Service (4) Capital(5) Other(6) Flows(7) Contract Life (8) NEER Exi
Slide 25: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions, after-tax) 1) Includes NextEra Energy’s share of contracts at consolidated projects and equity method investees 25
Slide 26: Non-Qualifying Hedges – Summary of Activity
Non-Qualifying Hedges(1) – Summary of Activity ($ millions) 3rd Quarter Asset / Asset / (Liability) Change in Total (Liability) Balance 1/1/18 Amounts Forward NQH Gain / Balance Description 6/30/18 Adjustments(3) Realized Prices (Loss) Other(4) 9/30/18 Pretax Amounts Gross Natural gas related positi
Slide 27: Non-Qualifying Hedges – Summary of Forward Maturity
Non-Qualifying Hedges – Summary of Forward Maturity ($ millions) (1) Gain / (Loss) Asset / (Liability) Balance Total Description 9/30/18 4th Qtr 2018 2019 2020 2021 2022 - 2047 2018 - 2047 Pretax gross amounts Natural gas related positions $ 684 $ (42) $ (76) $ (75) $ (84) $ (407) $ (684) Gas Infras
Slide 28: Reconciliation of Adjusted Earnings to GAAP Net Income (Q3 2018)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 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 29: Reconciliation of Adjusted Earnings to GAAP Net Income (Q3 2017)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Three Months Ended September 30, 2017) Florida Power Energy Corporate & NextEra Energy, (millions, except per share amounts) & Light Resources Other Inc. Net Income (Loss) Attributable to NextEra Energy, Inc
Slide 30: 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, effect of non-qualifying hedges, the transitional impa
Slide 31: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “anticipat
Slide 32: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) 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 f
Slide 33: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) risk to NextEra Energy Resources of increased operating costs resulting from unfavorable supply costs necessary to provide NextEra Energy Resources' full energy and capacity requirement services; inability or failure by Nex
Slide 34: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 35: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) (millions) Q3 2018 YTD 2018 Net Income $ 110 $ 385 Add back: Depreciation and amortization 49 152 Interest expense (31) 93 Income taxes 15 13 Tax credits 60 202 Gains on disposal of Canadian Holdings and relat
Slide 36: NEP Wind Production Index
NEP Wind Production Index(1)(2) 2017 2018 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 West 909 85% 85% 86% 85% 909 102% 93% 908 104% 908 102% 908 99% 111% 97% 102% 103% Texas 250 79% 65% 101% 82% 500 93% 89% 500 102% 500 108% 50
Slide 37: NEP's holdco leverage to project distributions metric target of 4.0x – 5.0x
NEP’s holdco leverage to project distributions metric target of 4.0x – 5.0x is consistent with its strong mid– to high–BB credit ratings Credit Metrics BB Actual Target (1) S&P Range 2017 YE 2018(4) Holdco Debt/EBITDA 4.0x - 5.0x 3.9x 4.0x - 5.0x Ba1 Actual Target (2) (4) Moody's Range 2017 YE 2018
Slide 38: NextEra Energy Partners – Portfolio Additions
NextEra Energy Partners announced an agreement to acquire ~1.4 GW of renewable projects from Energy Resources as we continue to execute on our plan to expand the portfolio NextEra Energy Partners – Portfolio Additions • Purchase price of $1.275 B(1), Portfolio Overview plus assumption of: Remaining
Slide 39: Portfolio Financing Summary Terms
Portfolio Financing Summary Terms(1) Key Terms Summary Funding Amount: BlackRock to fund $750 MM; NEP to fund the balance of the $1,275 MM Energy Resources portfolio purchase price Issuer: Newly-formed private HoldCo managed and operated by affiliates of NEP BlackRock to purchase Class B Common Equi
Slide 40: NEP Portfolio Run-Rate Walk
NEP Portfolio Run-Rate Walk Adjusted EBITDA CAFD ($ MM) ($ MM) $1,200 $450 $290–$310 ($10–$20) $1,000–$1,150 $122–$132 ($18–$20) $400 ($10–$20) $1,000 $360–$400 $350 $830–$930 ($110–$130) $310–$340 ($45–$55) $800 $300 $250 $600 $200 $400 $150 $100 $200 $50 $0 $0 2017 Canadian Q4 2018 IDRs & 2018 201
Slide 41: Expected Cash Available for Distribution (2018 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,100-$1,250 ($15-$25) ($75-$85) $1,000-$1,150 ($200-$250) ($400-$480) ($30-$35) ($5-$15) $360-$400 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service(2)
Slide 42: Expected Cash Available for Distribution (2019 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($265-$315) ($470-$550) ($30-$35) ($5-$15) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service(2
Slide 43: 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 44: 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 45: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) A change in the jurisdictional characterization of some of the Texas pipeline entities' assets, or a change in law or regulatory policy, could result in increased regulation of these assets, which could have a material adve
Slide 46: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's business; NEP may not be able to access sources of capital on commercially reasonable terms, which wou
Slide 47: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units and preferred units currently cannot remove NEP GP without NEE’s consent; NEE’s interest in NEP GP and the control of NEP GP may be transferred to a third party without unitholder consent; The