Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Debt Investor Presentation (May 2012)
39 slides from Nextera Energy's debt investor presentation, May 7, 2012
Slide 1: Company Overview and Financing Strategy
Company Overview and Financing Strategy Moray Dewhurst Vice Chairman and Chief Financial Officer May 7, 2012
Slide 2: Agenda
Agenda • Today’s objectives • Strategy and expectations • The role of credit • Implications for financing • Today’s agenda 2
Slide 3: We view today as a first step
We view today as a first step Objectives • Clarify for you: – What we are trying to accomplish from a business perspective – Why we do what we do – What it means for our approach to financing •00 Improved Communications Greater Predictability 3
Slide 4: Agenda
Agenda • Today’s objectives • Strategy and expectations • The role of credit • Implications for financing • Today’s agenda 4
Slide 5: Fundamentals
Fundamentals Observations Implications • Commodity product; hard to • Relentless focus on cost, reliability, differentiate continuous improvement – “operational excellence” • Cyclical; tied to commodity cycles • Tight risk management: singles and doubles vs swinging for the fences • Long-lived, immo
Slide 6: History of sustained growth through different industry phases
History of sustained growth through different industry phases FPL Cumulative Adjusted Earnings Per Share(1) Capital Employed(2) $4.30 $4.39 $4.05 $3.84 $21.7 $3.49 $19.5 $3.04 $17.7 $15.9 $2.63 $13.8 $14.8 $2.41 $2.48 $2.49 $11.6 $12.3 $10.0 $10.8 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '02 '03 '04
Slide 7: Our approach to the business at FPL is founded on the "virtuous circle"
Our approach to the business at FPL is founded on the “virtuous circle” Customer Satisfaction Superior Constructive Customer Value Virtuous Circle Regulatory Delivery Environment Strong Financial Position 7
Slide 8: Our strategy at Energy Resources has always been to build around our core strengths
Our strategy at Energy Resources has always been to build around our core strengths, taking advantage of market opportunities Energy Resources Strategy Core Strengths Visible Growth Opportunities + Operational Excellence + Financial Strength Skills New Solar + Scale Nuclear Business (Seabrook) + Sco
Slide 9: Energy Resources now operates in 23 states and 4 Canadian provinces
Energy Resources now operates in 23 states and 4 Canadian provinces(1) 1) As of 3/26/12 9
Slide 10: Energy Resources has grown dramatically, but we do not pursue growth for growth's sake
Energy Resources has grown dramatically, but, we do not pursue growth for growth’s sake Energy Resources Capacity History Energy Resources Capacity Growth 2002 to 2011(1) • Energy Resources sold 20,000 five natural gas-fired 18,000 assets in 2011 16,000 14,000 – ~2700 MW total capacity MW 12,000 10,
Slide 11: Our two primary businesses are built on a common platform of shared skills
Our two primary businesses are built on a common platform of shared skills, with tangible benefits to both A premier regulated utility… …and a diversified, competitive power producer Engineering & Construction Supply Chain Nuclear Generation Non-nuclear Generation 11
Slide 12: Similar logic underpins our limited commitment of capital to other lines of business
Similar logic underpins our limited commitment of capital to other lines of business Capital Employed (YE 2011) Structured PMI/Retail Products 0.6% Wholesale Full Competitive Proprietary Requirements Retail Trading NEER less Marketing & Trading Capability - Asset Optimization PMI/Retail 99.4% Contri
Slide 13: Our operational performance is partially due to our structure
Our operational performance is partially due to our structure SAIDI: System Average (1) Interruption Duration Index $2.50 Cost/kWh(2) Minutes 2.28¢ 175 $2.25 Good Industry Average 150 Industry Average $2.00 125 $1.75 1.64¢ 100 $1.50 FPL 75 FPL $1.25 50 $1.00 25 '03 '04 '05 '06 '07 '08 '09 '10 '11 Bi
Slide 14: We have one of the lowest risk emissions profiles in the industry
And we have one of the lowest risk emissions profiles in the industry NextEra Energy 2011 Fuel Mix(1) SO2 Emissions Rates Hydro (MWh) (Lbs/MWh) 1.0% Solar 16 0.3% Nuclear 22% 12 Wind 13% Coal 8 6% NextEra Energy Natural Gas 4 Oil 1.0% 56% 0 NOx Emissions Rates CO2 Emissions Rates 4 (Lbs/MWh) 2,500 (
Slide 15: Today our position is strong and our outlook is exciting
Today our position is strong and our outlook is exciting FPL Energy Resources Increasing capital… Largest ever renewable backlog… $B $30.0 • ~1,300 MW of U.S. wind $25.0 • ~600 MW of Canadian wind $20.0 • ~900 MW of solar $15.0 $10.0 • All expected to go into service $5.0 through 2016 $0.0 2011 2012
Slide 16: At FPL, we are investing heavily to improve long-term customer value
At FPL, we are investing heavily to improve long-term customer value without driving up customer bills FPL’s Capital Expenditures(1) $4.0 $3.0 $ B $2.0 $1.0 $- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E FPL’s Major Capital Projects Estimated Approx. Project Name Fuel Est. PS
Slide 17: FPL submitted its formal base rate filing on March 19th
FPL submitted its formal base rate filing on March 19th FPL Base Rate Request • Summary of request: – $516.5mm base revenue increase effective January 2, 2013 – $173.9mm step increase coinciding with COD of the Cape Canaveral modernization – Three major drivers: Cape Canaveral cost recovery Less sur
Slide 18: Energy Resources has the largest renewables backlog in its history
Energy Resources has the largest renewables backlog in its history Wind and Solar Development • In 2012, Energy Resources plans Estimated Cap Ex for Wind and to add ~1,300 MW of new U.S. Solar Projects through 2014(1) wind capacity, which are $5.9 - $6.3 B contracted or long-term hedged • We have a
Slide 19: Successful development of Lone Star's CREZ line represents a significant regulated growth opportunity
Successful development of Lone Star’s CREZ line represents a significant regulated growth opportunity Lone Star Transmission CREZ Line • In January 2009, Lone Star was selected by Texas PUC as a CREZ(1) transmission service provider – ~320-mile line – ~$800 million of rate base • Received approval f
Slide 20: We are intensely focused on execution
We are intensely focused on execution Critical Success Factors for 2012 • At FPL: – Continue to deliver outstanding customer value – Continue execution on major capital projects – Achieve satisfactory outcome of base rate case • At Energy Resources: – Ensure solid execution in daily operations – Mov
Slide 21: Our capital expenditure and financing plans support our financial expectations through 2014
Our capital expenditure and financing plans support our financial expectations through 2014 and beyond Adjusted Earnings Per Share Expectations 2012 $4.35 - $4.65 2014 $5.05 - $5.65 NextEra Energy’s adjusted earnings expectations exclude the cumulative effect of adopting new accounting standards, th
Slide 22: Increasingly regulated and long-term contracted mix
The opportunities we are pursuing are leading us to an increasingly regulated and long-term contracted mix Adjusted EBITDA(1) from Adjusted Earnings from Regulated and Long-Term Regulated Businesses Contracted Operations 100% 100% 84% 78% 80% 80% 65% 58% 60% 60% 40% 40% 20% 20% 0% 0% 2011 2014E 2011
Slide 23: Agenda
Agenda • Today’s objectives • Strategy and expectations • The role of credit • Implications for financing • Today’s agenda 23
Slide 24: Credit is a central component of our strategy
In addition to its role in helping us manage industry cyclicality, credit is a central component of our strategy Applications of Credit/Liquidity At FPL At Energy Resources • Fuel hedging program • Hedging power sales, fuel purchases, gas production • Storm restoration • Enhanced competitive positio
Slide 25: A strong financial position benefits FPL customers and NextEra Energy shareholders
A strong financial position benefits FPL customers and NextEra Energy shareholders Credit Ratings Utility Credit Ratings(1) NextEra Energy Ratings(2) NextEra Energy S&P Moody's Fitch NextEra Energy Issuer credit rating A- Baa1 A- Outlook Stable Stable Stable Florida Power & Light First mortgage bond
Slide 26: NextEra Energy recently refinanced about 75% of its corporate credit facility
NextEra Energy recently refinanced about 75% of its corporate credit facility $10 Corporate Credit Facilities (1) Largest credit $8.1 ($ Billions) $8 $7.4 facility in the industry $6.0 $6 $5.3 $4.8 $4.5 $4.0 $3.8 $3.8 $4 $3.7 $2 Refinanced $5B in Q1 2012 with 37 $0 banks participating NEE EXC/CEG DU
Slide 27: Our strong financial position enabled us to weather the financial crisis
Our strong financial position enabled us to weather the financial crisis without compromising our investment program 2006 – 2011 Total Financing 2006 2007 2008 2009 2010 2011 Cash from Operations $2,498 $3,593 $3,403 $4,463 $3,834 $4,074 Capital Expenditures/Other (3,807) (4,578) (5,808) (5,935) (5,
Slide 28: Credit underpins our hedging programs at both principal businesses
Credit underpins our hedging programs at both principal businesses 2013 Portfolio Financial Information (as of March 15, 2012) Equivalent Equivalent Equivalent 1 Expected Gross Margin % Gross EBITDA1 Remaining2 Following3 Generation Range Margin Range Contract Year PTC MWs Twh's $ in millions Hedged
Slide 29: We are significantly hedged at both our levered and unlevered assets
We are significantly hedged at both our levered and our unlevered assets for the next several years Energy Resources Equivalent Gross Margin Contracted or Hedged(1) On a consolidated basis our gross margin is currently hedged: Existing New 2012 96% 99% 2013 93% 100% 2014 87% 100% We remain foc
Slide 30: Credit is valuable, limited and must be utilized wisely
Credit is valuable, limited and must be utilized wisely NextEra Energy Capitalization as of 3/31/12 Project Debt: • Conserves corporate Project credit Debt 16% • Forces “the market test” Equity 39% FPL Debt, NEECH Debt and Other Hybrids 32% 7% Equity Units 2% Commercial Paper 4% 30
Slide 31: Agenda
Agenda • Today’s objectives • Strategy and expectations • The role of credit • Implications for financing • Today’s agenda 31
Slide 32: Key Financing Principles
Our financing strategy is based on a set of key principles Key Financing Principles • Support strong credit position – Among the strongest in the industry • Maintain adequate liquidity – Avoid constraining optimization of investing activities • Ensure access to diverse set of funding sources – Instr
Slide 33: Financing strategy: an overview
Financing strategy: an overview Financing Strategy • At FPL: – Maintain regulatory capital structure (balance of equity and long-term debt) – Roughly match debt maturity profile to long-term nature of assets – Balance cash needs with CP utilization; limit idle cash • At NEECH/NEE – Support balanced
Slide 34: Growth in retained earnings has added $6.6 B of equity
Over the last 10 years, growth in retained earnings has added $6.6 B of equity to our balance sheet Retained Earnings and Equity Issuance Annual Total (in $MM) Cumulative Total (in $MM) 2,000 12,000 1,800 10,000 1,600 1,400 8,000 1,200 1,000 6,000 800 4,000 600 400 2,000 200 0 - 2002 2003 2004 2005
Slide 35: We recently sold $600 MM of equity units through a competitive bid process
We recently sold $600 MM of equity units through a competitive bid process Highlights of Recent Offering • This product is often sold in a 1-2 day marketing period led by a syndicate of banks – Market determines where the deal will clear on coupon and conversion premium – Stock price typically decli
Slide 36: Our financing plan is flexible and designed to support growth
Our financing plan is flexible and designed to support growth and maintain our strong balance sheet Future Financing Plans • Continued use of broad mix of products depending on market conditions • Additional equity may be required to support current growth plans: – Ratings profile strong 2014 and be
Slide 37: Agenda
Agenda • Today’s objectives • Strategy and expectations • The role of credit • Implications for financing • Today’s agenda 37
Slide 38: 2012 Fixed Income Day Agenda
2012 Fixed Income Day Agenda Capital Structure Overview and Financing Our Growth Paul Cutler, Treasurer Project Finance and Tax Equity Dan Lotano, Director of Finance Equity Units, DOE Loan Guarantee, and International Financing Amy Black, Assistant Treasurer Hybrids and Select Financings Aldo Porta
Slide 39: NextEra Energy
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