Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Barclays CEO Energy-Power Conference 2017
52 slides from Nextera Energy's conference presentation, Sep 6, 2017
Slide 1: Barclays CEO Energy-Power Conference
Barclays CEO Energy-Power Conference John Ketchum Executive VP and CFO, NextEra Energy September 6, 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: We have a long-term track record of delivering value to shareholders
We have a long-term track record of delivering value to shareholders Adjusted Earnings Per Share(1) Total Shareholder Return(2) 20% 18% 60% $6.19 53% $5.71 16% $5.30 50% $4.97 15% 43% $4.39 $4.57 $3.84 $4.05 $4.30 12% 40% $3.49 29% $3.04 10% 30% $2.63 20% 5% 10% 0% 0% '05 '06 '07 '08 '09 '10 '11 '12
Slide 4: NextEra Energy achieved strong financial results in the first half of 2017
NextEra Energy achieved strong financial results in the first half of 2017, driven primarily by new investments NEE First Half 2017 Performance Review • NextEra Energy achieved year-over-year growth of ~11% in adjusted earnings per share – Growth in cash flow from operations of ~9% compared to 2016(
Slide 5: We are well positioned to continue this track record for the next four years
We are well positioned to continue this track record for the next four years Wholesale FPL & Service FPL Coal Retirements Energy Territory Expansion Services FPL FPL Battery FPL T&D FPL New Solar Infrastructure Generation Storage Expect $40 B - Capital FPL $44 B of capital New Wind Generation Asset
Slide 6: FPL – Areas of Focus
At FPL, we are focused on continuing to identify smart investment opportunities and improve our outstanding value proposition across the board FPL – Areas of Focus • Continue to execute on our Cost & Reliability best-in-class customer value Operational Cost(1) SAIDI(2) ($/Retail MWh) (Minutes) propo
Slide 7: Since 2006, FPL has made significant capital investments while reducing fuel costs
Since 2006, FPL has made significant capital investments while reducing fuel costs and achieving best-in-class O&M 2006 – 2016 2006 – 2016 Capital Expenditures(1) Total Operating Expense $B $B $5 $10 $8.5 $4.2 $4.2 $8.2 $8.2 $4.1 $4 $8 $7.7 $3.7 $3.3 $6.6 $6.7 $6.0 $6.0 $5.9 $3 $2.8 $2.8 $6 $5.6 $2.
Slide 8: FPL 2017 – 2020 Investment Initiatives
FPL projects total capital deployment of $17.5 B to $19.0 B from 2017 to 2020 through smart investments that result in customer savings and enhanced reliability FPL 2017 – 2020 Investment Initiatives Projected Recovery Opportunity Status Investment(1) Mechanism In construction and on track to Solar
Slide 9: FPL's strategy continues to result in typical residential bills below averages
FPL’s strategy continues to result in typical residential bills below both Florida and National averages FPL 1,000-kWh Residential Bill $140 $132.87 $120.45 $120 $108.61 $102.62 $102.29 $100 Good $80 $60 $40 $20 $- FPL FPL FPL FL IOUs (2) National (3) 2006 2017(1) 2020E Average Average FPL expects t
Slide 10: Energy Resources' renewables development opportunities have never been stronger
Energy Resources’ renewables development opportunities have never been stronger Cost and Technology Improvements Best-in- Development Class Nuclear/Coal- Federal Tax Skills Construction to-Renewables Incentives Expertise Switching ~60 GW U.S. Cost of Customer Renewable Capital and Relationships Dema
Slide 11: Wind and solar are expected to be competitive into the next decade
With continued technology improvements and cost declines, wind and solar are expected to be competitive into the next decade Wind and Solar Technology Levelized Cost of Levelized Cost of Electricity from Wind Electricity from Solar (Including Production Tax Credits) (Including Investment Tax Credits
Slide 12: Energy Resources expects to invest $22 B to $25 B over the next four years
Energy Resources expects to invest $22 B to $25 B over the next four years, primarily in renewables Energy Resources Development Program(1) (Signed Contracts as of July 26, 2017) 2017 – 2018 2017 – 2018 2019 – 2020 2019 – 2020 2017 – 2020 Signed Current Signed Current Current Contracts Expectations
Slide 13: Battery efficiency improvements and cost declines expand the storage market
Battery efficiency improvements and cost declines are expected to expand the storage market and enable even greater renewables expansion Storage Technology Lithium-ion 4-Hour Battery Pack Cost(1) Battery Storage Adder(2) $/kWh $/MWh $1,200 $80 $71-$81 $1,000 $70 $1,000 $60 $800 $45-$55 $50 $642 $38-
Slide 14: We have expanded into the natural gas pipeline business
We have leveraged our skills and capabilities to expand into the natural gas pipeline business Natural Gas Pipeline Assets Sabal Trail and Florida Mountain Texas Southeast Connection (FSC) Valley Pipeline (MVP) Pipelines • ~$1.5 B investment in Sabal • NextEra expects to invest • NEP completed the $
Slide 15: NextEra Energy Post–2020 Snapshot
We expect opportunities for smart capital deployment to continue beyond 2020 NextEra Energy Post–2020 Snapshot Generation Nuclear Transmission and Modernization 26% Distribution Wind Solar Storage Gas Pipelines 15
Slide 16: Disruptive Industry Changes
We are well positioned to capitalize on and respond to potentially disruptive changes to our industry in the next decade Disruptive Industry Changes Potential Cost per kWh Post-2020(1) Shale (¢/kWh) Gas 3.5 - 5¢ 4 - 5¢ 3 - 4¢ 3 - 4¢ Big Data Renewables 2 - 3¢ /Storage Generation Wind Solar Gas Coal
Slide 17: Even in an extreme no growth scenario, NEE would generate strong free cash flow
Even in an extreme “no growth” scenario, we would expect NEE to generate strong free cash flow Hypothetical “Steady State” Cash Flow (Based on 2018 expectations) Baseline Hypothetical Operating $7.3 B to $7.7 B Sustained $7.3 B to $7.7 B Cash Flow Capital (1) ($10.0) B to ($11.0) B Reduce Growth Cap
Slide 18: Adjusted EPS compound annual growth rate of 6% to 8% through 2020
We remain well positioned to achieve our adjusted EPS compound annual growth rate of 6% to 8% through 2020 NextEra Energy’s Adjusted Earnings Per Share Expectations • Remain committed to maintaining the strength of our balance sheet $7.85 - $8.45 • Expect $3 B – $5 B of excess $6.80 - balance sheet
Slide 19: We expect to continue to grow our dividends per share through at least 2018
We expect to continue to grow our dividends per share through at least 2018 at an above average rate compared to our peers NextEra Energy Dividend Per Share Expectations • Updated dividend policy in $3.48 2015 to reflect expected $2.90 $3.08 growth in DPS of 12% - 14% $2.64 per year through at least
Slide 20: NextEra Energy presents an attractive value proposition
NextEra Energy presents an attractive value proposition NextEra Energy Value Proposition • Proven track record with experienced management team 9% - 11% / year • Consistent low-risk strategy with largely regulated and long-term contracted portfolio and growth Expected • Constructive regulatory Adjus
Slide 21: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 22: Since the IPO, NEP has grown distributions by more than 100%
Since the IPO, NEP has grown distributions by more than 100% and delivered total unitholder return of 74% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices $1.52 100% 90% 80% 74% 70% 60% 50% 40% 40% 33% 30% 20% $0.75 10% 0% -10% (7%) Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 201420142
Slide 23: NextEra Energy Partners achieved solid financial results in the first half of 2017
NextEra Energy Partners achieved solid financial results in the first half of 2017, driven primarily by portfolio additions NEP First Half 2017 Performance Review • Year-to-date adjusted EBITDA and CAFD growth of over 20% against prior-year comparable period • Grew distributions per unit by ~15% yea
Slide 24: NEP's value proposition is built upon four core strengths
NEP’s value proposition is built upon four core strengths NextEra Energy Partners’ Core Strengths High-Quality Portfolio Financial Strength and Flexibility Issuer Credit ~3 GW Rating(3) Year-end 2017E 18-Yr A3 Renewables >90% Ba1/BB/BB+ Remaining Counterparty Capacity of Project Debt ~1.2x & Tax Equ
Slide 25: Acquisitions, organic growth and third party M&A provide visibility to future growth
Acquisitions from Energy Resources, organic growth and third party M&A all provide NEP with clear visibility to future growth Growth Opportunities Potential Acquisition of Potential Organic Clean Energy Potential for 3rd Prospects for Assets at Energy Party Texas Pipelines Resources, Acquisitions an
Slide 26: Existing Energy Resources' portfolio could provide a path to 12% - 15% growth
Existing Energy Resources’ portfolio alone could provide one potential path to 12% - 15% growth per year through 2022 Energy Resources’ Renewable Portfolio Since NEP’s IPO GW 14 ~5 GW ~13 GW 12 ~10 GW ~2 GW 10 8 6 4 2 - (1) Renewables Portfolio MW Sold to NEP MW Placed Current Portfolio after IPO si
Slide 27: NEP is exploring organic growth opportunities
NEP is exploring organic growth opportunities in the form of potential pipeline expansion and repowerings Organic Growth Opportunities Texas Pipelines Expansion ($MM) • NEP is exploring expansion $190-$210 growth opportunities at the TX pipelines – $300 MM - $350 MM investment $145-$155 at ~6x Adjus
Slide 28: There is a large addressable renewables market in which NEP can compete
There is a large addressable renewables market in which NEP can compete Third-Party Opportunities Potential Addressable Market (1) Yieldcos & MLP Trading Yields(2,3) ~$1,570 B NEP trades at a competitive yield Total Midstream Market compared to other Yieldcos and high growth MLPs ~31% ~$480 B MLPs ~
Slide 29: Governance changes at NEP to enhance LP unitholder rights
We have implemented certain governance changes at NEP in order to enhance LP unitholder rights Enhancing Unitholder Governance Rights Prior Structure New Structure • BOD at NEP GP • New BOD at NEP LP Board of • Three Directors appointed by GP (NEE) Directors • NEE appointed all Directors • • Four Di
Slide 30: NEP's ongoing financing optimization minimizes need for common equity
NEP’s ongoing financing optimization is expected to minimize the need for common equity Optimizing The Capital Structure Investor IDR Fee Low double-digit Investor Demand Modification ROEs on acquisitions Demand Access Access to Preferred financing Dividend Alternative to Low Low Cost Financing supp
Slide 31: NEP's credit ratings increase financing flexibility and debt capacity
NEP’s credit ratings increase financing flexibility and debt capacity due to greater market access Corporate Credit Rating and Debt Capacity • NEP corporate credit ratings: New Opportunities High-Yield Term Loan B Debt Moody’s S&P Fitch Revolving Ba1 BB BB+ Credit Facility Convertible Stable Stable
Slide 32: NEP is exploring refinancing its existing HoldCo debt
NEP is exploring the opportunity to refinance its existing HoldCo debt and extend and expand its existing revolving credit facility Debt Optimization Opportunities • There is ~$1.1 B of HoldCo Debt Maturities short-term HoldCo debt that ($ MM) will mature in 2018 and 2019 $700 – $950 MM in term loan
Slide 33: NEP is on track to meet its growth expectations in 2017
NEP is on track to meet its growth expectations in 2017 NextEra Energy Partners Expectations(1) Adj. EBITDA Distributions per Unit(4) ($MM) Annual $875-$975 12%-15% Growth(5) $670-$760 $1.58-$1.62 $1.41 2016 YE 2017 YE Run-Rate (2) Run-Rate (3) Q4 2016 Q4 2017E Q4 2022E CAFD Guidance Tenor vs. High
Slide 34: NEP offers a superior value proposition
We believe NEP offers a superior value proposition and is better positioned than ever to deliver upon the expectations that we have shared Investor Total Return Potential • Opportunity to earn a total return of ~4% 16% - 19% roughly 16% - 19% per year through at least 2022 12% - 15% • Diversified po
Slide 35: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 35
Slide 36: NExTera’
NExTera’ ENERGY @
Slide 37: Contracted Renewables Development Program
Contracted Renewables Development Program(1) Wind Location MW Solar Location MW 2017 – 2018: 2017 – 2018: Oliver III ND 99 Whitney Point CA 20 Huron MI 150 Marshall MN 62 Golden Hills North CA 46 Stuttgart AR 81 Bluff Point IN 120 Westside CA 20 Eight Point NY 102 Blue Bell TX 30 Dodge County MN 200
Slide 38: Reconciliation of Earnings Per Share to Adjusted Earnings Per Share
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.34 $ 3.23 $ 3.27 $ 4.07 $ 3.97 $ 4.74 $ 4.59 $ 4.56 $ 4
Slide 39: Reconciliation of Adjusted Earnings to GAAP Net Income (Six Months 2017)
Reconciliation of Adjusted Earnings to GAAP Net Income Attributable to NextEra Energy, Inc. (Six Months Ended June 30, 2017) 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 40: 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 Inc. Net Incom e (Loss) Attributable to NextEra Energy, Inc. $
Slide 41: Reconciliation of GAAP Operating Cash Flow to Adjusted Operating Cash Flow
Reconciliation of NextEra Energy, Inc. GAAP Operating Cash Flow to Adjusted Operating Cash Flow Six Months Ended Six Months Ended (millions) June 30, 2016 June 30, 2017 Inc/(Dec) Grow th Cash flow s from operations $ 3,270 $ 3,165 $ (105) (3.2%) FPL clause recoveries (137) (10) Acquisition of Indian
Slide 42: Definitional information
Definitional information NextEra Energy, Inc. and NextEra Energy Resources, LLC. 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
Slide 43: 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 44: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effect of reductions in the liquidity of energy markets on NextEra Energy's ability to manage operational risks; effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading pr
Slide 45: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 46: NEP is on-track to meet its 2017 run-rate Adjusted EBITDA and CAFD expectations
NEP is on-track to meet its 2017 run-rate Adjusted EBITDA and CAFD expectations Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $960-$1,060 ($15-$25) ($60-$70) $875-$975 ($290-$320) ($240-$280) $ MM ($30-$35) ($3-$8) $310-$340 (2) (3) (4) (5) 1) Project-Level Adjusted E
Slide 47: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) Six months ended (millions) June 30, 2017 Net income $ 95 Add back: Depreciation and amortization 99 Interest expense 104 Income taxes 19 Tax credits 96 Benefits associated with differential membership interes
Slide 48: Definitional information
Definitional information NextEra Energy Partners, LP. Adjusted EBITDA and CAFD Expectations This presentation refers to adjusted EBITDA, CAFD, and project-level CAFD expectations. NEP’s adjusted EBITDA expectations represent projected (a) revenue less (b) fuel expense, less (c) project operating exp
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 (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 51: 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 52: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common 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 IDR fee may be assig
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