NextEra Energy Partners(NEP) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NextEra Energy reported a GAAP net income of $1.234 billion, or $2.56 per share for Q2 2019, with adjusted earnings of $1.133 billion and adjusted EPS of $2.35, reflecting strong performance across all businesses [41][43] - Adjusted EPS increased nearly 13% year-over-year, driven by successful performance across all business lines [9][41] - FPL's earnings per share increased by $0.05 year-over-year, with net income growth of nearly 6% [10][15] Business Line Data and Key Metrics Changes - FPL reported net income of $653 million, or $1.37 per share, an increase of $37 million year-over-year [15] - Energy Resources adjusted EPS increased by $0.10 year-over-year, primarily due to contributions from new investments [12][32] - Gulf Power reported GAAP earnings of $45 million, or $0.09 per share, with adjusted earnings of $58 million, or $0.12 per share [24] Market Data and Key Metrics Changes - FPL's average number of customers increased by approximately 100,000 year-over-year, with retail sales up approximately 6.5% [30] - Gulf Power's retail sales increased 2.3% year-over-year, primarily due to favorable weather [31] - Florida's economy continues to grow, with an unemployment rate of 3.4%, and the real estate sector showing growth [29] Company Strategy and Development Direction - NextEra Energy is focused on capital investments to lower costs, improve reliability, and provide clean energy solutions [10][23] - The company is capitalizing on a favorable environment for renewables development, with a backlog increase of more than 1,850 megawatts [12][13] - NextEra Energy Partners is positioned to benefit from significant wind and solar growth expected in the U.S. [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year financial expectations, despite potential lower growth rates in the second half of the year due to various factors [14][45] - The company expects adjusted EPS growth at the top end of the 6% to 8% range through 2021, with a compound annual growth rate expected to continue through 2025 [46][49] - Management remains optimistic about the resolution of PG&E's bankruptcy and its impact on cash flow [55][67] Other Important Information - NextEra Energy Transmission acquired Trans Bay Cable, expanding its rate-regulated operations [42] - The company expects to grow dividends per share by 12% to 14% per year through at least 2020 [48] - NextEra Energy Partners executed a plan to expand its portfolio by acquiring approximately 600 megawatts of wind and solar projects [52] Q&A Session Summary Question: Benefits of merging utility businesses - Management indicated that the evaluation of merging Gulf Power and FPL is in early stages, with potential operational and financial benefits being considered [73][74] Question: Update on PG&E - Management is focused on ensuring PG&E successfully exits bankruptcy to free up cash flow, while also exploring other options [75][76] Question: Second half activities and wind repowerings - Management discussed liability management activities and the potential negative net income impact from wind repowerings, which are expected to yield long-term benefits [79][80] Question: Gulf Power integration and rate case filing - Integration efforts at Gulf Power are progressing well, with a rate case filing expected in 2021 for new rates effective in 2022 [88][89] Question: Wind and solar development changes - Management noted geographic expansion in wind and solar development, with positive customer reception for low-cost generation opportunities [93][94] Question: Competitive dynamics with new entrants - Management emphasized maintaining competitive advantages in scale and capital, despite new entrants in the renewables market [96]