NextEra Energy Partners(NEP) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NextEra Energy reported a strong increase of more than 9% year-over-year in adjusted earnings per share, which rose by 9.4% in the first half of the year [9][34] - FPL's earnings per share increased by $0.03 year-over-year, driven by a regulatory capital employed growth of approximately 10.7% [40] - Adjusted EBITDA for NextEra Energy Partners was $560 million, with cash available for distribution at $220 million [53] Business Line Data and Key Metrics Changes - FPL's capital expenditures for the quarter were approximately $2.1 billion, with full-year expectations between $8 billion and $8.8 billion [34] - Energy Resources added over 3,000 megawatts of new renewables and storage projects to its backlog, totaling approximately 22.6 gigawatts [27][37] - Contributions from new investments in Energy Resources increased by $0.12 per share year-over-year, primarily due to growth in the renewables portfolio [42] Market Data and Key Metrics Changes - FPL's retail sales increased by 3.7% year-over-year, attributed to warmer weather, with a weather-normalized growth of approximately 1.1% [41] - The demand for new renewables is projected to triple over the next seven years, driven by a significant increase in power demand across multiple sectors [24][30] - Wind resources for Q2 2024 were approximately 104% of the long-term average, compared to 88% in Q2 2023 [36][54] Company Strategy and Development Direction - The company aims to deliver low-cost clean energy and storage for customers both inside and outside Florida, while building new transmission where required [32] - NextEra Energy is focused on capital recycling around its renewable assets and is exploring partnerships in transmission and gas infrastructure [90] - The strategic focus includes leveraging competitive advantages in renewable energy and storage to meet growing customer demands [25][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting financial expectations and delivering results at or near the top of adjusted EPS ranges through 2027 [50] - The company is well-positioned to capitalize on the growing demand for renewables and storage, particularly in light of the shift towards artificial intelligence and electrification [28][30] - Management highlighted the importance of maintaining a strong relationship with suppliers to mitigate risks associated with supply chain disruptions [81] Other Important Information - NextEra Energy Partners declared a quarterly distribution of $0.95 per common unit, reflecting a 6% increase from the previous year [51] - The partnership has approximately $2.7 billion of liquidity after recent debt repayments [52] - The company expects to grow dividends per share at roughly 10% per year through at least 2026 [50] Q&A Session Summary Question: Update on reserve amortization and earned ROE - Management noted that population growth in Florida has driven increased usage, with regulatory capital employed growing from an expected 9% to around 12% [63][64] Question: Details on the Blackstone financing - The portfolio sold to Blackstone was 1.6 gigawatts of renewable assets, indicating strong demand for NextEra's assets [68][70] Question: Turbine performance and issues - Management emphasized their strong operational partnership with GE, stating that any turbine issues have been well managed [72] Question: NEP's options and timing - Management is exploring various alternatives for NEP, with no immediate need for growth equity until 2027 [75][76] Question: Supply chain challenges - Management expressed confidence in their supply chain strategy, stating that they have effectively transferred risks to suppliers [81][84] Question: Asset recycling strategy - Management is optimistic about capital recycling options, particularly in renewables and transmission [88][90] Question: Trends in PPA pricing - Management noted a positive dynamic in the market, with stable pricing helping to reduce risks [108][109] Question: Hyperscaler deals and Google relationship - Management confirmed ongoing contracts with Google to support data center demand, focusing on wind, solar, and battery storage [118][120]